South Africa agrees to $1.5bn World Bank loan to upgrade infrastructure
For more than a decade, South Africa has struggled to grow as regular blackouts have crippled productivity while crumbling rail networks and chronically congested ports have frustrated major industries such as mining and vehicle-making.
The government hopes the loan will ease transport bottlenecks and improve energy security, but it did not provide details of specific projects the World Bank money would be earmarked for.
The financing should also limit rising debt-service costs as it carries more favourable terms than commercial borrowing, including having a three-year grace period.
State-owned energy and transport companies Eskom and Transnet have been mired in operational and financial crises for years, holding back growth, which rose just 0.1% in the first quarter.
The Treasury gave the interest rate on the 16-year World Bank loan as six-month secured overnight financing rate plus 1.49%.
It is separate from $500m (R9.05bn) of financing the World Bank Group is considering to help unlock private investment in the electricity transmission grid, which needs to be expanded to connect more renewable energy projects.
Finance minister Enoch Godongwana's budget last month contained more than R1-trillion of investment across transport, energy, water and sanitation to support growth and improve public services.
It aimed for public debt to peak at 77.4% of GDP this fiscal year, slowly declining after that.
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