Intergovernmental development finance institution, the Opec Fund for International Development has provided a $150-million development policy loan to South Africa, which is aimed at supporting critical structural reforms to improve the efficiency, resilience and sustainability of the country’s infrastructure services.

The loan will support the South African government’s ongoing reform programme aimed at unlocking infrastructure bottlenecks, particularly in the energy and freight transport sectors, which are critical for enabling inclusive economic growth, improving service delivery and fostering job creation, the National Treasury notes in a media statement.

The financing terms of the loan are aligned with National Treasury’s financing strategy, which seeks to diversify funding sources, secure cost-effective financing and minimise increases in debt service costs.

The loan provides favourable pricing and flexible repayment terms compared with conventional market funding, it says.

The financing terms of the $150-million Opec Fund loan include a maturity of six years with a two-year-grace period, and an interest rate set at a six-month secured overnight financing rate plus 1.25%.

“This marks the first loan agreement between the government of South Africa and the Opec Fund and represents an important partnership in addressing South Africa’s pressing economic challenges of low growth and high unemployment.

“The National Treasury welcomes this partnership and expresses its appreciation for the institution’s support towards South Africa’s development objectives and infrastructure reform agenda,” Treasury states.