Question NW3661 to the Minister of Finance
11 December 2023 - NW3661
Graham, Ms SJ to ask the Minister of Finance
(1)Whether the $1 billion Development Policy Loan from the World Bank to the value of R19 billion was granted on the basis of a business plan presented in support of the loan; if not, what are the relevant details of the basis on which the loan was granted; if so, will he furnish Ms S J Graham with a copy of the business plan; (2) what are the terms of the loan in respect of the (a) loan period, (b) interest rate and final value of the loan, (c) amortisation schedule, (d) repayment frequency, (e) collateral and guarantees, (f) default terms, (g) late payment charges and (h) any other terms; (3) whether the loan falls within the funding made available in terms of the Just Energy Transition Programme; if not, why not; if so, what are the relevant details, including the date on which the loan will take effect?
Reply:
(1) The instrument used for this loan is a Development Policy Operation (DPO), which means this loan is provided to South Africa on the strength of a completed set of policies and reforms. The institutional reforms that are referenced on the DPO fall under climate change and the electricity sector, mostly covered under NECOM.
(2) The DPL terms includes the following:
|
Institutions |
Disbursement |
Interest rate |
Terms |
Grace |
Amount |
|
World Bank |
n/a |
6-month SOFR plus 0.95% |
15 |
5 |
US$1.0 |
(c) & (d) the loan and interest are to be repaid biannually in March and September, principal repayment to begin in 2029 and end in 2038.
(e) The DPL is a sovereign loan and does not require collateral or guarantee.
(f) & (g) In line with the World Bank’s International Bank of Reconstruction and Development (IBRD) General Conditions for Loans and Guarantees, if any amount of the withdrawn loan balance remains unpaid when due and such non-payment continues for a period of thirty days, then the Borrower shall pay the Default Interest Rate on such overdue amount in lieu of the interest rate specified in the Loan Agreement.
(h) All other conditions of the DPL are governed by the IBRD General Conditions for Loans and Guarantees https://documents1.worldbank.org/curated/en/577851500256855740/pdf/GCs-Board-paper-June-22-Final-with-Annexes-06232017.pdf
3. No, this type of funding is categorised as budget support loans aimed aims to support South Africa’s economic recovery, inclusive and accelerated growth, and commitment to the just transition to a low-carbon and resilient economy.
The loan will take effect within 90 days from signing the loan agreement.