South Africa’s proposal for a $750 million (R11.4 billion) development policy loan has been granted by the World Bank.
This loan will help the government speed up its Covid-19 response, which aims to protect the poor and vulnerable from the pandemic’s negative socioeconomic effects while also promoting a resilient and long-term economic recovery, Treasury said in a statement on Friday (21 January).
“The World Bank budget support comes at a critical time for us and will help us close the budgetary gap created by additional spending in response to the Covid-19 problem,” said Dondo Mogajane, the National Treasury’s director-general.
“It will help us meet the immediate challenge of funding critical health and social safety net programs while also advancing our economic reform agenda to help us rebuild better.”
The financing, according to Treasury, is a low-interest loan that will help South Africa’s fiscal relief program. A number of international monetary organizations, including the International Monetary Fund, the African Development Bank, and the New Development Bank, have already expressed their support.
South Africa’s economic performance has spillover effects on other countries in the region, according to the World Bank, as Africa’s second-largest economy. Its recovery and sustained economic development will benefit the entire region, according to the report.
The loan comes ahead of finance minister Enoch Godongwana’s first budget statement in February when he is anticipated to propose a slew of new support measures for South Africans.
Lindiwe Zulu, South Africa’s social development minister, has suggested that a new basic income award will likely be brought in over several years, with her department presently lobbying for a baseline extension of the R350 Social Relief of Distress (SRD) payment.
“It may take a few years to gradually implement, depending on costs and the country’s fiscal situation.” Until then, she said, “the department is now asking for the extension of the Special Covid-19 SRD Grant, preferably in the medium term.”
“This should give much-needed income support for those aged 18 to 59 years to help them cope with the economic difficulties caused by the Covid-19 outbreak.”
The R350 social alleviation of distress grant will be phased out by the end of March 2022.
