The South African government and the World Bank have signed a US$1.5 billion Development Policy Loan Agreement that will assist in unlocking key infrastructure bottlenecks, particularly in the energy and freight transport sectors.
The loan is directed to supporting critical structural reforms in the energy and freight sectors.
In a statement issued on 23 June 2025, the National Treasury said the loan is aimed at supporting critical structural reforms to enhance the efficiency, resilience, and sustainability of the country’s infrastructure services. The loan support is anchored on three key pillars of structural reform: improving energy security, enhancing the efficiency and competitiveness of freight transport services, and supporting South Africa’s transition towards a low carbon economy. These reforms are seen as critical enablers of inclusive growth and job creation in the country.
“This partnership marks a significant step towards addressing South Africa’s pressing economic challenges of low growth and high unemployment. The financing forms part of the government’s broader efforts to implement structural reforms that strengthen public institutions, crowd in private investment, and improve service delivery across priority sectors of the economy,” National Treasury said.
The financing terms of the loan are in line with National Treasury’s financing strategy. Specifically, the loan offers favourable interest rates and flexible repayment terms, contributing to minimising an increase in debt service costs. The financing terms of the World Bank loan are as follows:
- Nominal value: US$1.5 billion
- Maturity: 16 years with a 3 year-grace period
- Interest rate: 6-month Secured Overnight Financing Rate (SOFR) plus 1.49%.
In the statement the National Treasury expressed its appreciation to the World Bank for its continued partnership and support in advancing South Africa’s development objectives, adding that this agreement reinforces the strong and constructive collaboration between the World Bank and the government of South Africa.
For more information visit: www.sanews.gov.za
