Godongwana says no specific conditions are attached to the R11 billion World Bank loan


The Treasury explained that the money comes from the World Bank’s development policy loan product and that the country, through its response to COVID-19 and socio-economic programs, has qualified for it.

FILE: Finance Minister Enoch Godongwana. Photo: GCIS.

JOHANNESBURG – Finance Minister Enoch Godongwana has said no specific conditions are attached to the 11 billion rand World Bank loan guaranteed by South Africa.

Godongwana and his team answered MPs’ questions about the loan on Tuesday before the Parliament’s Standing Committee on Finance.

The Treasury explained that the money comes from the World Bank’s development policy loan product and that the country, through its response to COVID-19 and socio-economic programs, has qualified for it.

But Floyd Shivambu of the Economic Freedom Fighters doesn’t see the reason.

“There is no rationality that has been given now as to why we received a loan from the World Bank except that we are eligible for a loan, therefore, we have to take it. What kind of logic is that ?Because I’m eligible for a loan, do I have to take it??

Godongwana appealed to MPs not to reject the loan, saying it would be detrimental to the work of his department.

“You can disagree with us, you are entitled to your opinion, but the rationale is there. The next set of issues is that if the committee rejects this, it will hurt the work we are doing.”

CONCERNS

Parliament’s Standing Finance Committee has expressed concern over the current debt servicing costs following the R11 billion loan from the World Bank.

The bank put the interest rate at 0.8%.

The country spends 270 billion rand a year on debt service, which is the third largest expenditure item, after education and social services.

Committee chair Joe Maswanganyi reiterated the committee’s longstanding position that high debt loads often have a detrimental effect on service delivery.

He said it was concerning that health and community development were the fourth and fifth largest national expenditure items respectively.

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