SA is getting R11bn from World Bank at a very low rate, cutting borrowing costs

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The loan for around R11.4 billion, at a highly concessional rate, will make a significant contribution to lowering SA’s borrowing costs for the year, which escalated over the past five years as investors have come to view SA as increasingly risky.(Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
The loan for around R11.4 billion, at a highly concessional rate, will make a significant contribution to lowering SA’s borrowing costs for the year, which escalated over the past five years as investors have come to view SA as increasingly risky.(Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

SA has secured its first major loan from the World Bank in the democratic era, after a lengthy negotiation, National Treasury and the international financial institution announced on Friday. 

The loan for $750m (around R11.4 billion), at a highly concessional rate, will make a significant contribution to lowering SA’s borrowing costs for the year, which escalated over the past five years as investors have come to view SA as increasingly risky. World Bank concessional interest rates are typically in the region of 1% or 2%.  

The yield on SA’s rand denominated long-term bonds, which is the principal way that government raises funding, has risen to over 9%.

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