SOUTH AFRICA – The World Bank has approved South Africa’s request for a US$750 million (R11.43 billion) low-interest loan, aimed at assisting the country’s economic recovery from Covid-19, Business Day reports.

The funds come as the country had been battling the fourth wave of the virus. The funds will be used to accelerate the country’s Covid-19 response, which aims to protect the poor and vulnerable from the pandemic’s negative socioeconomic impacts, according to a statement from the Treasury.

The Covid-19 pandemic caused South Africa’s worst recession since World War II, particularly in labor-intensive industries such as tourism and the restaurant industry.

Dondo Mogajane, Director-General of the National Treasury, said the funds arrived at an opportune time to address the country’s social security net and other health challenges.

The World Bank budget support is coming at a critical time for us 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 programmes whilst also continuing to develop our economic reform agenda to build back better,” Mogajane said.

In April 2020, the government announced an R500 billion (US33.11 billion) support package to combat Covid-19, roughly one-tenth of SA’s GDP, with R130 billion (US$ 8.61 billion) coming from reprioritizing the state’s budget, with the Treasury also looking for funding from local and international sources.

However, it appeared to have struggled with the World Bank, with the Washington-based lender reportedly taking issue with the size of the public-sector wage bill.

This prompted then-finance minister Tito Mboweni to declare that the World Bank could “keep their cents” if it wanted to impose policy prescriptions in late 2020.

The IMF had approved a US$4.3 billion loan for SA in 2020, at the same time that SA had received US$1 billion in emergency funding from the New Development Bank.

World Bank Group COVID-19 Response

Since the start of the COVID-19 pandemic, the World Bank Group has spent more than US$157 billion to combat the pandemic’s health, economic, and social consequences, making it the fastest and largest crisis response in its history.

The funding was assisting over 100 countries in strengthening pandemic preparedness, protecting the poor and jobs, and kicking off a climate-friendly recovery.

The Bank is also assisting over 50 low- and middle-income countries, more than half of which are in Africa, with the purchase and deployment of COVID-19 vaccines, and has made a US$20 billion loan available for this purpose until the end of 2022.

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