$1.5bn loan won’t harm SA sovereignty – Masondo

He says the funding aligns with National Treasury’s commitment to responsible and sustainable borrowing.

The loan, announced on Monday, forms part of the government's broader efforts to boost infrastructure spending and support structural reforms, at a time when South Africa faces mounting pressure to narrow its budget deficit.

Masondo said the National Treasury required the funds to ease infrastructure bottlenecks, particularly in the energy and freight transport sectors, to support inclusive economic growth and job creation.

He was speaking to the media on the sidelines of the Supreme Audit Institutions (SAI20) meeting in Johannesburg on Tuesday.

"Firstly, borrowing in itself is not bad. The key question is: what are you borrowing the money for? If you're borrowing to invest in infrastructure and grow the economy, that’s justifiable. The second issue is whether you can service that debt, and what enables repayment is economic growth.

"So, if we borrow to support economic growth, that’s sustainable borrowing. This has always been our position. The Reconstruction and Growth Programme (RGP), the ANC’s founding policy document, says borrow from anywhere in the world — as long as it’s affordable and doesn’t compromise national sovereignty.

"The loan we've secured from the World Bank aligns with this principle. It’s aimed at supporting economic growth, and there’s nothing in the agreement that undermines our national sovereignty,” Masondo said.

He added that the funding supports broader structural reforms to strengthen public institutions, attract private investment, and improve service delivery.

"Building strong institutions is critical. They must be able to hold the government accountable and ensure transparency in how we manage public finances,  including how revenue is raised and accounted for.

" Given the shortfalls in public finances and the high demand for services, we borrow to bridge the gap. Lenders need assurance that funds are used for their intended purposes,  in this case, infrastructure, because it drives economic growth.

"As the economy grows, we are better positioned to generate revenue, not just to expand services and stimulate growth, but also to service debt. Investor confidence depends on how well we manage institutions. We must avoid repeating the era of state capture, when institutions were repurposed for narrow personal and political interests.”

In a statement, the National Treasury said the partnership marks a significant step in tackling South Africa’s structural economic challenges, including low growth and high unemployment.

"The loan will help unlock key infrastructure constraints, especially in energy and freight transport, enabling inclusive growth and job creation.

"The financing forms part of government’s wider plan to implement reforms that strengthen public institutions, attract private sector investment, and enhance service delivery across priority economic sectors.

" The loan support is anchored on three pillars: improving energy security, enhancing the competitiveness of freight transport, and supporting South Africa’s transition to a low-carbon economy.

"These reforms are critical enablers of inclusive growth and job creation. The loan’s favourable interest rates and flexible repayment terms also help contain debt service costs, consistent with National Treasury’s financing strategy,” Treasury said.

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