The Government of South Africa has signed a US$1.5 billion Development Policy Loan Agreement with the World Bank to support critical structural reforms aimed at modernizing infrastructure and driving inclusive economic growth. This landmark partnership seeks to address the country’s pressing challenges of low economic growth and high unemployment.
The loan will focus on unlocking infrastructure bottlenecks in key sectors such as energy and freight transport, enabling improved service delivery and fostering job creation. It forms part of South Africa’s broader strategy to strengthen public institutions, attract private investment, and transition toward a low-carbon economy.
The agreement is anchored on three key pillars of reform: improving energy security, enhancing the efficiency and competitiveness of freight transport services, and supporting South Africa’s shift to a sustainable, low-carbon economy. These reforms are expected to boost economic resilience and create opportunities for inclusive growth.
The financing terms of the loan align with the National Treasury’s strategy to ensure financial stability. The loan offers favorable interest rates and flexible repayment terms, minimizing the impact on debt service costs. Key terms include a nominal value of US$1.5 billion, a 16-year maturity period with a 3-year grace period, and an interest rate of 6-month SOFR plus 1.49%.
The National Treasury expressed gratitude to the World Bank for its continued support in advancing South Africa’s development objectives. This agreement underscores the strong collaboration between the two entities in addressing the country’s economic challenges.
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