The National Treasury has defended government’s decision to get a loan from the World Bank describing it as part of its efforts to cut debt-service costs by using cheaper funding sources in its response to the coronavirus pandemic.
On Tuesday, the World Bank confirmed that it had approved almost R 8 billion for South Africa to help it to finance COVID-19 vaccine procurement. This project will retroactively finance the procurement of 47 million COVID-19 vaccine doses.
In January this year, the bank also approved South Africa’s request for an R 11. 4 billion loan to assist with the country’s economic recovery plan in the wake of the pandemic.
National Treasury’s reason to borrow from World Bank: Dr Duncan Pieterse:
National Treasury Acting Director-General, Ismail Momoniat says, “South Africa welcomes this EUR 454.4 million World Bank loan to support COVID-19 vaccination as the spread of the virus continues to pose a threat to South Africa’s citizens, health system, and economic recovery. The loan forms part of government efforts to reduce debt service costs by making use of cheaper sources of funding through multilateral development banks, whilst supporting the health system to respond to COVID-19 through the roll-out of vaccines, critical research, and treatment measures.”
World Bank Country Director for South Africa, Marie Françoise Marie Nelly says, “This support aims to put the country on a more resilient and inclusive growth path by boosting South Africa’s COVID-19 vaccination efforts with the goal of vaccinating up to 70% of the country’s target population. This project builds on our new World Bank Group Country Partnership Framework (CPF) 2022 – 2026, jointly developed with the government in July 2021 to help stimulate investment and job creation.”
Treasury says the project will help the government better cope with the pandemic, as the country experiences its fifth wave, and support government to create the fiscal space needed to strengthen its health system and ensure financial and institutional sustainability.
In a statement, Treasury says, “South Africa has embarked on a robust vaccination program. As of June 13, 2022, over 36.4 million doses have been administered, with about 50.3% of adults and 29.9% of 12 to 17-year-old adolescents vaccinated. However, more can be done to increase vaccine coverage, curb the spread of the virus, and boost the country’s economic recovery.”
“Along with the Genomic Surveillance Project, which seeks to improve the capacity to identify variants of COVID-19 in South Africa and the Africa region, and the South Africa COVID-19 Response Development Policy Operation, which aims to protect the poor and vulnerable from the adverse socio-economic impacts of the COVID-19 pandemic, the COVID-19 Emergency Response Project forms part of World Bank’s expanded support for South Africa’s response to the pandemic.”
The statement adds that, in addition to providing vital support to South Africa’s health system, this new low-interest loan contributes to the government’s fiscal relief package while reinforcing South Africa’s decisions on how best to provide relief to the economy and those worst affected by the crisis.