The South African government and the World Bank have signed a $1.5-billion Development Policy Loan Agreement aimed at supporting the country’s efforts to achieve inclusive growth by tackling infrastructure constraints, identified as the primary barrier to job creation.

This serves as the fourth development policy loan and continued partnership with the World Bank, aimed at addressing South Africa’s economic challenges of low growth and high unemployment, National Treasury notes in a statement.

The loan is expected to assist South Africa with implementing the necessary interventions aimed at advancing reforms in the electricity, freight and logistics sectors, and addressing challenges in the water and sanitation sector.

The financing forms part of the government’s broader efforts for continued momentum on structural reforms in the energy, logistics and water sectors, among others.

The loan support is anchored on three key pillars of structural reform, namely, strengthening energy competitiveness and security, upgrading freight transport services and delivering efficient water and sanitation services. These are reforms aimed at boosting economic growth and job creation.

The financing terms of the loan are in line with Treasury’s borrowing strategy that aims to ensure long-term debt sustainability and affordability by raising funding at the lowest cost.

Specifically, the loan offers both favourable interest rate and flexible repayment terms, aimed at minimising the rise in debt service costs.

This loan, combined with financing secured from other multilateral development partners, has enabled government to meet its 2026/27 foreign currency borrowing requirement of $3.2-billion.