The World Bank has approved South Africa’s $750 million development loan request. The loan is set to support South African government’s efforts to accelerate its COVID-19 response by protecting both the vulnerable and poor from adverse socio-economic impacts of the pandemic and support a resilient and sustainable economic recovery. This is according to a statement released by South Africa’s Treasury released today.
The funding is a low interest loan that contributes to the government’s fiscal relief package while reinforcing South Africa’s decisions on how to provide relief to the economy and those worst affected by the crisis. The loan complements support by the International Monetary Fund, Africa development Bank and the New Development Bank as part of the government of South Africa’s broader financing strategy to access external financing from the international financial institutions.
Marie Françoise Marie-Nelly, World Bank country director for South Africa says that through the development policy loan (DPL) there has been a partnership between South Africa and World Bank to get the economy going again. “With this DPL, we have partnered with the government to provide much needed relief from the impacts of the most serious economic crisis South Africa has experienced in the past 90 years, while tackling long-standing challenges to growth and development,” she said. She further added that this support is aimed at putting the country on a more resilient and inclusive growth path by leveraging South Africa’s strength to mitigate the effects of the Covid-19 crisis through their strong social safety net and by advancing critical economic reforms.
“The World Bank budget support is coming at a critical time for us and will contribute towards addressing the financing gap stemming from additional spending in response to the COVID-19 crisis,” says Dondo Mogajane, Director General of National Treasury of South Africa. He further said that it will assist in addressing the immediate challenge of financing critical health and social safety net programs whilst continuing to develop the economic reform agenda to build back a better South Africa post pandemic.
As the second largest economy in Africa, South Africa’s economic performance has spillover effects on the other countries in the region, its recovery and successful economic development will provide a great economic boost for the region.