Land Bank's debt and loan book have been cut by more than half, South African officials said on Monday, as the state-owned agricultural lender prepares to emerge from more than four years of default.
Land Bank defaulted on its debt in April 2020, becoming the first large South African state entity to do so. It had failed to agree restructuring terms with its lenders until the government said last week that a deal had been reached.The bank's chief executive told reporters its debt had fallen from over 45 billion rand ($2.5 billion) at the time of default to 16 billion rand. Four billion rand would be repaid when the "liability solution" takes effect later this month, leaving 12 billion rand to be repaid until March 2028.
Themba Rikhotso said Land Bank will be allowed to "incur further borrowings provided this is done within set parameters to ensure that current lenders' rights are protected".Finance Minister Enoch Godongwana said it was commendable that the bank had been able to repay via its own cashflow 60% of its funding liabilities since defaulting. But he said the bank's financial support to the agricultural sector had fallen from 45 billion rand at its peak to about 17 billion rand.
"We want the bank to adhere to the covenants set out in its debt restructure agreement, and to begin a process to address its funding structure so that we never find ourselves in a similar position again," Godongwana said.He said of the 10 billion rand in state bailouts given to Land Bank around the time of its default, 3.7 billion rand had been allocated to a blended finance scheme."We also ensured that the bank found self-help measures while keeping fiscal support to a minimum," Godongwana said.