Cape Town - Minister of Finance Pravin Gordhan has given his support to the plan by the Development Bank of Southern Africa (DBSA) to double loans to local authorities.

Over the next five years the bank will make about R35bn available to municipalities. This is more than half the R70m funding that the bank will grant to sectors in South Africa to help them out of the recession.

Until now loans to municipalities have amounted to R16.6bn or 75.5% of the bank's public-sector loan book of R28.5bn.

Of the R35bn, R7bn will be advanced to struggling municipalities, and the funding available for metros will increase from R11bn to R20bn.

Furthermore, the bank will make R300bn available in grants to municipalities unable to repay loans.

Luther Mashaba, managing executive of DBSA's South African operations, told Sake24.com that Gordhan supported this plan, and the bank had not asked the Minister for money or guarantees.

But DBSA has asked that certain regulations in the Development Bank of Southern Africa Act regarding the bank's financing structures be amended.

This would enable it to lend more money to the market, said Mashaba.

- Sake24.com

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