Finance minister Tito Mboweni says that the probability of securing a loan from the World Bank has declined as "conversations" with the international finance institution have not yet yielded a conclusion.
Mboweni had previously said that SA would apply for a $50m (R817m) Covid-related loan from the bank to help fund the fight against the pandemic. This has not been received and discussions with the World Bank have turned to a bigger loan of $2bn, which is not Covid-related.
Speaking at a media briefing on Wednesday after presenting his medium-term budget policy statement, Mboweni said he was less hopeful.
"Major conversations are taking place between the Treasury and the World Bank. This is not a Covid-related loan and this is what complicates issues. The conversations are ongoing but in my view the probability of success is less [than before]. We are concerned about the posture the World Bank is taking and we are going to refine our discussions."
On Tuesday, Bloomberg reported that talks between the two parties had stalled over the World Bank’s attempt to impose the conditions that bailouts to state-owned enterprises must stop and that the public sector wage bill must be cut. Business Day has separately established from people with direct knowledge of the process that these conditions are not under discussion. But neither party would explain the stumbling block.
The bank said it would not comment, and Mboweni said he would announce the outcome when talks were concluded.
SA has an unprecedented borrowing requirement this year of R774bn due to the collapse in revenue and the funding demands of the Covid-19 epidemic and lockdown. This is more than double the amount that the government anticipated it would have to raise in the February budget.
But while SA successfully raised $4.3bn from the International Monetary Fund, $1bn from the New Development Bank (NDB) and $280m from the African Development Bank through special Covid facilities that were provided without conditions, the World Bank facility is proving harder to secure.
Mboweni said the Treasury had applied for an additional $1bn from the NDB.
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