South Africa’s Treasury has welcomed a World Bank group board’s approval of the country’s request for a $750 million development policy loan (DPL).
The Treasury in a statement on Friday said the loan would support government’s efforts to accelerate its COVID-19 response, which was aimed at protecting the poor and vulnerable from the adverse socio-economic impacts of the pandemic. The response was also aimed at supporting a resilient and sustainable economic recovery.
It said DPL supports the implementation of South Africa’s Economic Reconstruction and Recovery Plan (ERRP) and was “well-aligned” with the World Bank’s Crisis Response Approach aimed at protecting lives, livelihoods and supporting a more inclusive and resilient growth path.
“It reflects priorities to modernise the country’s social protection and health services and to improve delivery systems which will apply even beyond the pandemic. It also enhances financial sector stability, specifically the establishment of a deposit insurance scheme. It further supports South Africa’s commitment to climate change,” said the Treasury.
Treasury Director-General Dondo Mogajane said the World Bank budget support is coming at a critical time for the county and will contribute towards addressing the financing gap stemming from additional spending in response to the COVID-19 crisis.
“It will assist in addressing the immediate challenge of financing critical health and social safety net programs whilst also continuing to develop our economic reform agenda to build back better.”
The department said the was a low interest loan that contributed to the government’s fiscal relief package while reinforcing South Africa’s decisions on how best to provide relief to the economy and those worst affected by the current crisis.
The loan complemented support by the International Monetary Fund, the African Development Bank, and the New Development Bank as part of the Government of South Africa’s broader financing strategy to access external financing from international financial institutions.
Marie Françoise Marie Nelly, World Bank Country Director for South Africa, said the bank had partnered with 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”.
“This support aims to put 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.
“This financing builds on our new World Bank Group Country Partnership Framework (CPF) 2022 – 2026, jointly developed with the government in July 2021, to help stimulate investment and job creation.”
The bank said the country, as the second largest economy in Africa, South Africa’s economic performance had “spill-over effects on other countries in the region,” saying its recovery and successful economic development would provide an economic boost to the whole region.