National Treasurys reason to borrow from World Bank: Dr Duncan Pieterse

South Africa’s COVID-19 Response has got a $750million boost as the World Bank Group Board of Executive Directors approved South Africa’s request for a $750million development policy loan. This loan will support the South African government’s efforts to accelerate its Covid-19 response. We are joined by Dr Duncan Pieterse, head of asset and liability management at the National Treasury.

Well south africa’s coveted 19 response has got a 750 million dollar boost as the world bank group board of executive directors approved south africa’s request for a 750 development policy low now this loan will support south african government’s efforts to accelerate its kovit-19 response we’re now joined by dr duncan peters the head of asset and liability management

At national treasury uh dr peters thank you so much for joining us and a very warm welcome to the full view thanks empire good evening i guess uh we need to take this loan with a pinch of salt and cautiously so because i suppose and i would imagine so many questions would be asked as to what will be the terms and conditions yeah well fortunately it is in the nature

Of world bank development policy loans that they don’t come with with conditions other than of course the standard requirement to repay and even in this instance we’ve been given a 13-year period to repay a three-year grace period where no repayments are required and then of course 10 years of paying the loan that is that is in addition to the interest rate which

Is highly concessional makes this of course very attractive funding and helps us to reduce our debt service costs and i still ask again dr peters what will the terms and conditions be and will such terms and conditions be adverse uh to the country’s fiscals well maybe i should just explain exactly how these development policy loans work the way it works is that the

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World bank would look at certain actions that the government has taken in our case they’ve looked at how we’ve responded to covert in terms of the households that we’ve supported they’ve looked at how we’ve responded in terms of how we’ve supported businesses and they’ve also looked at over the last year or so the kind of reforms that we’ve that we’ve implemented

In addition to that they do an assessment of our macroeconomic policy and then on the basis of actions that we’ve already taken in in the world bank language they call it prior actions on the basis of these prior actions they then allocate the funding so there are no real conditions other than a country needs to be in good macroeconomic standing it needs to have

Taken certain actions that um would enhance its its um future economic growth growth prospects and also it needs to have taken certain actions in response to covert and on the basis of those prior actions that we’ve taken we are then able we were then able to qualify for this loan well this loan will also i suppose reinforce the decisions on how best to provide

Relief to the economy and those worst affected by the health crisis this is just one facet of the fiscal constraints that the country is facing how can uh you know a relief of this magnitude be provided then well i think what’s what’s clear is that look at the time of the medium-term budget last year we indicated that we are going to be diversifying our sources of

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Funding we are going to in addition to the funding we raise from the markets we are also going to approach development finance institutions like the world bank and the imf because these institutions allow us to lower the cost of our funding the decisions around what the government spends the money on remains our decision this funding is not earmarked for anything

In particular and of course any decisions around the policy objectives that we pursue remain the decision of of the government and of course more details around exactly what is contained in the budget uh for next year will be announced later in february would it also cushion the economic hardships that has been faced by south africans those in particular between

The age groups of 18 to 59 years put simply will this help towards you know extending the 350 rand social relief of a distress grant as i said earlier what this loan does is it recognizes prior actions so it recognizes the actions that we have already taken in order to support households through for example the 350 grant if there are any announcements by the

Government for an extension of the 350 grand for example that will be announced at the time of the budget and this loan really has no bearing on that decision which is a decision that the government needs to take okay dr peters great chatting to you thank you so much for joining us this evening

Transcribed from video
National Treasury's reason to borrow from World Bank: Dr Duncan Pieterse By SABC News

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