DA seeking answers on R370bn China loan

South Africa's opposition DA says it will demand full details about a R370bn loan allegedly negotiated by President Cyril Ramaphosa with China as a ‘stimulus package’, notes a Fin24 report. The party said it would send parliamentary questions to the Presidency and the Minister of Finance Nhlanhla Nene to seek full details of the terms and conditions attached to the ‘gift’ of R370bn that President Ramaphosa has apparently ‘negotiated’ with China. ‘Recent media reports indicate that the Chinese government has promised this multi-billion rand ‘‘gift’’ to SA as some sort of stimulus package,’ the party said in a statement. ‘It would be naive in the extreme to think that this ‘‘gift’’ from the Chinese comes with no strings attached.’ The DA warned that the country could fall into a ‘debt trap’ if it failed to meet the repayments. It said Ramaphosa was desperate to meet the $100bn target in foreign investment he announced after his appointment in February.

Ramaphosa reassured members of the National Council of Provinces that electricity utility Eskom would not be taken over if it defaulted on its $2.5bn (R33.4bn at the time) loan from the Chinese Development Bank, notes a Fin24 report. Ramaphosa was responding to a question from DA member Cathleen Labuschagne in a question and answer session in the National Council of Provinces. Labuschagne asked for the terms of the Chinese state bank's loan to Eskom, as well as a separate R4bn loan to Transnet. As reported in Legalbrief Today, the DA said it plans to make an application in terms of the Promotion of Access to Information Act to get access to the full loan agreement. Noting it was not unusual for state-owned entities, such as Eskom, to raise capital in the market for infrastructure development, Ramaphosa said: ‘Eskom got into a deal for R33bn which will be used to fund the construction of Kusile coal power station. The facility has a grace period of five years and is repayable by Eskom in 20 installments over a period of 10 years.’ Fin24 notes he said the China Development Bank facility was more competitive than the global market rate, but did not provide details, adding conditions of the agreement could not be made public as they are subject to confidentiality clauses, and would put Eskom at a disadvantage when pursuing more funding from the markets. ‘We are very jealous of our assets and will not hand them over to any other country or any other entity. That, I can assure you. Eskom has entered into loan agreements with the African Development Bank, World Bank and has always maintained our sovereignty,’ Ramaphosa said.