World Bank Loan an indication of increasing desperation

15 May 2022

Note to Editors: Please find attached soundbite by Dr Dion George MP.

The DA notes the announcement from the World Bank that it has approved a R7.6 billion loan to retrospectively finance the procurement of 47 million Covid-19 vaccine doses.

The National Treasury added that this loan forms part of government efforts to reduce debt service costs by making use of cheaper sources of funding.

The recent IMF report detailed their concern over South Africa’s rapidly rising debt obligation and, at our recent meeting indicated that they had not given a loan to the SA government following their recent visit to Washington DC.

The role of the World Bank is to reduce poverty by lending money to the governments of its poorer members to improve their economies and to improve the standard of living of their people, and often acts as a lender of last resort. A clear indication that borrowing in the investment markets is becoming more difficult as questions arise over sustainability and the ability to repay loans incurred.

The ANC government’s loan from the World Bank is another clear indication that South Africa has run out of money and is digging hardworking taxpayers into a deeper and deeper debt trap that crowds out more and more service delivery to the most vulnerable members of our society.

Interest repayments on debt will drain the fiscus of R1 trillion over the next 3 years. Of every R5 raised in tax, R1 is spent on serving debt.

The DA will ask the Minister of Finance, Enoch Godongwana, what the terms are of the repayment of the debt and will shortly table a private members bill to ensure fiscal responsibility.

This World Bank loan is an indication of increasing desperation to fund an increasingly unsustainable financial situation.

Issued by Dion George, DA Shadow Minister of Finance, 15 June 2022