South Africa finalising R54 billion loan package with World Bank, KfW, and African Development Bank
Finance Minister Enoch Godongwana has revealed that the government is managing a loan package totalling about 54 billion rand
Image: Elmond Jiyane / GCIS
Finance Minister Enoch Godongwana has revealed that the government is managing a loan package totalling about R 54 billion from international lenders, including the World Bank, African Development Bank, and KFW.
In an interview with Bloomberg Television on Thursday, Godongwana said the funds will support municipal projects and performance-related initiatives aimed at improving service delivery and strengthening local government operations across the country.
The announcement comes amid growing concerns over the country's escalating debt levels. South Africa's debt-to-GDP ratio has grown from 23.6% in 2008/09 to a projected 74.7% in 2024/25.
The International Monetary Fund has also recommended that South Africa reduce its debt-to-GDP ratio to 60% to align with international standards.
Godongwana explained that this is not a single new loan but rather a package made up of multiple loans from different development partners.
“We’re dealing with another one now, which is supporting performance-related for municipalities. Again, it’s a consortium of the World Bank, the KFW, the African Development Bank, all of them coming together to put up a loan for us,” he said.
He added that the total loan amount, in rand, is expected to be about 54 billion, and that the funds will likely be disbursed in stages, with some going directly to municipalities and some allocated as a policy loan to support broader reforms.
“I think in Rands overall, the total loan is going to be about 54 billion. I suspect it’s going to be staggered because some of it is going to be going into municipalities. Some of it is in what is called the policy loan."
The announcement comes barely a month after the World Bank approved a $1.5 billion (R26 billion) loan to support the country's "key reforms aimed at making the country’s infrastructure more efficient and sustainable."
According to the bank, the loan also aims to address South Africa’s twin economic challenges of low growth and high unemployment by easing infrastructure constraints in the energy and freight transport sectors.
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