SA’s R26bn World Bank loan ‘relatively low’
An economist has described South Africa's R26 billion infrastructure loan from the World Bank as relatively small and low-interest.
"This money will come in the form of US dollars," says economist Dawie Roodt.
"The amount of US dollars that we owe is actually relatively low. The main issue is the total debt of the state. The state's debt is getting out of hand, and the only way that we can put a lid on that is to cut back on state expenditure."
The US-based bank approved the funds to support structural reforms and economic growth, as well as help reduce unemployment.
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The move comes amid a warning from the Treasury that government debt is still climbing - and it is expected to reach R6.8 trillion in the next financial year.
However, the IFP's Narend Singh feels the country should borrow less.
" Our GDP-to-debt ratio is a matter of concern; in every country, they've got debt. Our ability to pay off that debt that matters. It requires economic growth. It requires more money coming into the fiscus if we borrow less, less debt, and then we have more taxes if we stimulate the economy."
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