There have been concerns about the increased loans, with opposition parties arguing that the money will need to be paid back but government says that it is necessary and the interest rates are low.
Despite President Cyril Ramaphosa deciding not to attend the World Economic Forum (WEF) meeting in Davos, Switzerland due to the electricity crisis, government is still focusing on raising affordable loans to attend to its needs.
The business day is reporting that government is in talks with the World Bank on a fresh $1 billion (R16.8 billion) loan.
This is part of a strategy to take advantage of cheaper loans from international financial institutions over the next three years rather than going back to foreign markets at a volatile time.
South Africa, like other countries, has borrowed money from the World Bank.
This has been for various projects, including COVID-19 and servicing foreign debt.
But the emphasis on borrowing has been highlighted by the country’s battle to keep the lights on.
In addition to the World Bank loans, a number of countries have agreed to make available $8.5 billion (R143.1 billion) as part of the just energy transition investment plan.
This is in addition to €600 million (R10.9 billion) in low-interest loans from Germany and France.
But the loan of $1 billion is the latest World Bank loan, along the lines of the $750 million (R12.6 billion) that the bank granted South Africa in January last year.
There have been concerns about the increased loans, with opposition parties arguing that the money will need to be paid back.
But government says that it is necessary and the interest rates are low.
By: Ray White
For more information visit: ewn.co.za