The New Development Bank (NDB) has approved and remitted a COVID-19 Emergency Program Loan of USD 1 billion to South Africa according to the National Treasury.
The disbursement from the lender, which serves the BRICS nations — Brazil, Russia, India, China and South Africa — means the country will get the bulk of funds borrowed from international finance institutions by the end of this week. It is due to receive the $4.3 billion facility granted by the International Monetary Fund on Wednesday.
The loan is intended will assist the South African government in rolling out its healthcare response to the coronavirus and in providing a social safety net to alleviate the economic impact of the disease containment measures on vulnerable individuals. The Program envisages preventing, detecting and responding to the health threat posed by COVID-19, and providing social grants to vulnerable groups affected by measures implemented to prevent and contain the disease.
The 5 billion rand ($303 million) approved by the continent’s biggest multilateral lender, the African Development Bank, is expected in August, the National Treasury said in an emailed response to questions.
The AfDB money will be paid in rands and the dollar-denominated loans from the NDB and IMF will be converted to rands by the Reserve Bank to finance the government’s local-currency commitments, the Treasury said. The central bank is the government’s banker. The borrowings will increase the government’s foreign cash balances and debt, the Treasury said.
While the central bank confirmed that it will receive the inflows on behalf of the government, it wouldn’t say how the conversions would be handled. “The South African Reserve Bank does not preannounce its operations in the foreign-exchange market,” it said.
Africa’s most-industrialized economy is counting on $7 billion from multilateral lenders and development finance institutions to support its response to the pandemic. The country will seek as much as $2 billion from the World Bank, according to Treasury Director-General Dondo Mogajane.
