Home News Researcher questions whether $750m World Bank loan will be used appropriately

Researcher questions whether $750m World Bank loan will be used appropriately

by Zahid Jadwat

JOHANNESBURG – A lead researcher at the Bench Marks Foundation (BMF) has questioned whether the $750 million (R11.5 billion) development policy loan granted to South Africa by the World Bank will be used appropriately.

 

Speaking to Salaamedia, researcher David Van Wyk highlighted concerns regarding the loan which was approved by the World Bank on Friday (21 Janurary). One of those concerns is that South Africa’s debt accumulates whilst, according to Van Wyk, mining profitibality has sky-rocketed but failed to contribute enough to the economy.

 

Van Wyk questioned whether the latest loan from the World Bank will be used appropriately: “According to the website for the World Bank, it is also to help shift the economy away from fossil fuels – towards renewable energy or alternative energy – and we are seeing that the department of mineral resources is allocating licenses for gas along the coast and we are seeing coal mining licenses, so I’m not sure that this money will be used for the purposes that it has been allocated”.

 

Treasury deputy director-general for asset and liability management Duncan Pieterse was quoted as saying that the proceeds will be used to meet interest payments on South Africa’s foreign debt and for the redemption of foreign debt.

 

Meanwhile, the Bureau for Economic Research (BER) welcomed the loan and suggested that the loan could be used to fund social grants in the country.

 

“Some of the funds may be used to help pay for the inevitable extension of the social relief of distress (SRD) grant beyond March 2022. This is at least the impression from the Treasury’s statement on the loan.”

 

The loan has a 13-year repayment period with a three-year grace period.

 

Julie Alli spoke to David Van Wyk on News & Views. Watch the full discussion here:

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