South Africa has secured a US$150 million development policy loan agreement from the OPEC Fund for International Development (OPEC Fund), the National Treasury has announced.
The loan is aimed at "supporting critical structural reforms to improve the efficiency, resilience, and sustainability of the country's infrastructure services".
"This marks the first loan agreement between the Government of South Africa and the OPEC Fund and represents an important partnership in addressing South Africa's pressing economic challenges of low growth and high unemployment.
"The loan will support government's ongoing reform programme aimed at unlocking infrastructure bottlenecks, particularly in the energy and freight transport sectors, which are critical for enabling inclusive economic growth, improving service delivery and fostering job creation," the department said in a statement.
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The financing terms of the OPEC Fund loan are as follows:
- Nominal amount: US$150 million
- Maturity: 6 years with a 2-year-grace period
- Interest rate: 6-month Secured Overnight Financing Rate, plus 1.25%
"The financing terms of the loan are aligned with the National Treasury's financing strategy, which seeks to diversify funding sources, secure cost effecting financing and minimise increases in debt service costs.
"The loan provides favourable pricing and flexible repayment terms compared to conventional market funding.
"The National Treasury welcomes this partnership and expresses its appreciation for the institution's support towards South Africa's development objectives and infrastructure reform agenda," Treasury said.
