New Development Bank approves $1 billion emergency loan for SA

The National Treasury has announced the approval of a $1 billion emergency assistance program loan to South Africa. On 19 June 2020, the Board of Directors of the New Development Bank (NDB) approved the loan. 

This comes after President Cyril Ramaphosa announced the reopening of personal care services, restaurants, cinemas, theatres and casinos.

WHAT THE NEW DEVELOPMENT BANK LOAN WILL BE USED FOR 

According to the National Treasury, the program is aimed at supporting the government of South Africa in its efforts to contain the spread of COVID-19 and reduce human, social and economic losses caused by the coronavirus outbreak. 

The program will contribute to providing critical healthcare resources and strengthening the social safety net in South Africa. The positive impacts will include improving the resilience of the public health sector and health emergency response systems and facilitating socio-economic recovery. 

In its statement in response to the COVID-19 outbreak, the New Development Bank Board of Governors welcomed the establishment of an Emergency Assistance Facility to meet the emergency needs of the member countries of the bank. 

Emergency loans to the member countries could be used to finance direct expenses related to the fight against the COVID-19 outbreak and provide support to governmental measures contributing to economic recovery. 

“National Treasury welcomes the approval of the loan and together with NDB are working on final technical and administrative requirements. Final details on the loan will be published once all processes have been concluded,” it said on Saturday 20 June. 

COVID-19: CUSHIONING THE ECONOMY

Speaking to Eusebius McKaiser on Monday 4 May, National Treasury’s Director-General Dondo Mogajane said President Cyril Ramaphosa’s relief package was about “cushioning” the impact of COVID-19. 

“The current relief package is about cushioning, we have to do what we have to do in the short term to cushion what is already a massive challenge. What do we do beyond that, we must come up with measures that accelerate critical structural reforms,” said Mogajane. 

Mogajane said reform should be focused on alleviating the plight of the country’s most vulnerable groups.

“There are structural challenges that we must deal with to look after our most vulnerable. Do we only preserve those that have jobs, or how do we expand this labour structure to accommodate those that want to come in and stop barriers to entry?” 

“We have to focus on a post-COVID-19 environment to know how the scene will look,” added Mogajane.