SA Treasury is looking to borrow R27bn from the World Bank
The Treasury is negotiating a new $1.5-billion (R27-billion) loan from the World Bank.
The proposed development policy loan is in the early stages of approval and will undergo several rounds of assessment and negotiation before the World Bank decides whether to approve it on 15 April. The loan is for the World Bank's 2025 fiscal year, which ends in June this year.
If the loan is approved, it will significantly boost the National Treasury's plan to increase financing from international loans.
World Bank loans are offered at very low interest rates compared to other forms of financing. The World Bank is the largest development financing agency in the world.
A development policy loan is a lending instrument that development finance agencies use to provide budget support to countries that have what the World Bank calls "prior actions" in place.
A prior action is a policy or institutional action that the loan recipient has already implemented and that the World Bank deems critical to supporting the funding operation's goals.
A development policy loan is not intended to finance specific projects.
If the proposed loan is secured, it will be one of the largest loans that South Africa has received from the World Bank. In 2023, the World Bank approved a $1-billion development policy loan given to Treasury. A $1-billion loan for South Africa's metros is in the pipeline and will head for approval later this month.
In recent years, the World Bank has provided smaller loans for medical research and biodiversity initiatives in South Africa.
The 2024 Medium-Term Budget Policy Statement, which includes projections for various economic indicators over three years, shows that Treasury wants to significantly increase the financing it receives from international loans.
While Treasury raised R45 billion from foreign loans in the 2023/24 financial year, it estimates that this will increase to just over R90 billion annually over the medium term.
-FIN24
The proposed development policy loan is in the early stages of approval and will undergo several rounds of assessment and negotiation before the World Bank decides whether to approve it on 15 April. The loan is for the World Bank's 2025 fiscal year, which ends in June this year.
If the loan is approved, it will significantly boost the National Treasury's plan to increase financing from international loans.
World Bank loans are offered at very low interest rates compared to other forms of financing. The World Bank is the largest development financing agency in the world.
A development policy loan is a lending instrument that development finance agencies use to provide budget support to countries that have what the World Bank calls "prior actions" in place.
A prior action is a policy or institutional action that the loan recipient has already implemented and that the World Bank deems critical to supporting the funding operation's goals.
A development policy loan is not intended to finance specific projects.
If the proposed loan is secured, it will be one of the largest loans that South Africa has received from the World Bank. In 2023, the World Bank approved a $1-billion development policy loan given to Treasury. A $1-billion loan for South Africa's metros is in the pipeline and will head for approval later this month.
In recent years, the World Bank has provided smaller loans for medical research and biodiversity initiatives in South Africa.
The 2024 Medium-Term Budget Policy Statement, which includes projections for various economic indicators over three years, shows that Treasury wants to significantly increase the financing it receives from international loans.
While Treasury raised R45 billion from foreign loans in the 2023/24 financial year, it estimates that this will increase to just over R90 billion annually over the medium term.
-FIN24
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