SA/World Bank talks stall
THE World Bank has told South Africa’s government it has to cut its wage bill to qualify for a loan of as much as $2 billion and agree the money won’t be used to bail out insolvent state companies, a source familiar with the situation said.
Those conditions have stalled negotiations on the loan that began in April, the source said, asking not to be identified because the content of the discussions have not been made public.
The World Bank said it will only comment if an agreement is reached. South Africa’s National Treasury didn’t respond to requests for comment.
South Africa this year has turned to multilateral lenders for the first time since the end of apartheid, overcoming political opposition from within the ruling party, as it tries to kick-start an economy forecast to contract the most in nine decades.
Finance Minister Tito Mboweni is expected to outline plans to fund a revival in output when he presents the medium-term budget on Wednesday and is under pressure to earmark more money to bail out state companies.