African Reserves Loans

‘This country is finished’: South Africans question new R11.5 billion loan to South Africa from World Bank

  • South Africa will receive an 11.5 billion rand loan from a global financial institution, the World Bank
  • The World Bank and the South African National Treasury say the loan would be used to help low-income families cope with the impacts of the Covid19 pandemic
  • South Africans question why South Africa needs another loan and fear it will be looted

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JOHANNESBURG – The World Bank has agreed to provide South Africa with a low-interest loan of R11.5 billion to help the country recover from the effects caused by the Covid19 pandemic. The announcement was made Friday, January 21.

The World Bank says this will help Mzansi better respond to the pandemic and accelerate government assistance to South Africans from poorer, low-income backgrounds in the face of the socio-economic impact of Covid19.

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South Africa, $750 million loan, World Bank, economic recovery, R11.5 billion, National Treasury
South Africa will receive a low-interest loan of R11.5 billion from the World Bank. Image: Phil Magakoe
Source: Getty Images

According to the joint statement released by the World Bank and the National Treasury, the loan will also help South Africa implement the economic reconstruction and recovery plan, reports End24.

The National Treasury added that the funds lent to South Africa will also help support health and social security programs.

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This is not the first loan granted to a South African since the start of the pandemic. In July 2020, the World Bank provided SA with a R70 billion loan which was to be earmarked for job creation as well as protecting businesses affected by the pandemic.

Another loan of R14.2 billion was granted in April 2021, however, this loan was offered by the New Development Bank (NDB), a financial institution established by the BRICS countries (Britain, Russia, India, China and South Africa).

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SABC News reports that with this new World Bank loan, South Africa’s debt servicing costs could be just over R1 trillion.

South Africans worried about South Africa’s growing debt

On social media, South Africans have raised concerns about the continued loans the country continues to get. Some people think the South African government should focus on paying back the money instead of borrowing more. Others said the loan will disappear because of corruption.

Here are some comments:

@PereDaHorse said:

“Why would you borrow a foreign currency when you won’t use it for any foreign transaction? South Africa has a reserve bank that can do what the IMF does, the worst part is South Africa has stable foreign exchange reserves.”

@maxwell_mncwabe said:

“The only thing left now is that the big moneylenders change the name of this country because there is no more SA, its people are also on loan, this country is finished, SOLD to the highest bidders.”

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@ModishaRichie said:

“Kanti, why don’t we focus on settling the debt, why are we still borrowing? Russia did it, South Africa can do it! Why borrow and borrow and borrow?”

@john_emjay said:

“So the @MYANC are actually not willing to improve the economy of this country. The country is already struggling to repay its debt but the ANC government continues to borrow money, the worst thing is that the borrowed money is always plundered and benefits their families.”

SA included in IMF R9 trillion emergency funding, SA to get R65 billion

In other business news, In brief News previously reported that the International Monetary Fund (IMF) is releasing the largest amount of money in emergency financing in its history.

The IMF’s board of governors has agreed to the allocation of $600 billion (R9 trillion) in emergency funds. The funding was generated to help countries fight and recover from the Covid-19 pandemic.

South Africa will receive 65 billion rand injected into its economy and help the government recover from the pandemic and violent unrest according to ENCA.

Source: News in Brief