Africa calls for IMF, World Bank and EU support for debt relief
JOHANNESBURG (Reuters) – African finance ministers want support from the International Monetary Fund, the World Bank and the EU for bilateral, multilateral and trade debt relief amid the coronavirus crisis, said the United Nations Economic Commission for Africa (ECA).
Africa faces a perfect storm of an impending global economic slowdown, falling oil and commodity prices and weaker currencies that threaten to jeopardize its response to the coronavirus.
Confirmed cases of the coronavirus on the continent had risen to at least 5,300 on Tuesday, with more than 170 deaths recorded, according to a Reuters tally. And while those numbers are only a fraction of current global cases, experts fear Africa’s crumbling health systems could easily be overwhelmed.
Co-chaired by South African Finance Minister Tito Mboweni and Ken Ofori-Atta of Ghana, the ministers met on Tuesday via video conference. Many wore medical masks, said UNECA, which hosted the meeting.
“The call for debt relief … should reach all of Africa and should be launched in a coordinated and collaborative manner,” the ECA said in a statement.
African governments have called for immediate relief from debt service obligations, including at the G20 summit last week, and would like to see some of their debts canceled or converted into long-term, low-interest loans. interest.
But the complexity of Africa’s creditors’ landscape, which includes traditional bilateral and multilateral lenders, China, commercial banks, commodity traders and bondholders, will complicate efforts to ease the burden of debt. mainland debt. [nL8N2BK105]
Some 55% of external interest payments go to private creditors, according to data compiled by the UK-based Jubilee Debt Campaign.
At a first meeting hosted by ECA last month, ministers asked for $ 100 billion this year to support African countries during the pandemic. [nL8N2BG69J]
After Tuesday’s meeting, they clarified that $ 44 billion of that amount would be pooled in a Special Purpose Vehicle (SPV) and used to service the external debt of African countries.
“This would ensure countries do not default on payments while providing them with the fiscal space they need to respond to the crisis,” read a second ECA statement released later Wednesday.
According to an ECA official, such an SPV would allow an immediate moratorium on debt service while African countries negotiate with creditors for more debt relief.
An additional $ 50 billion may be needed for additional stimulus and sustained interest payments in 2021.
The ministers agreed that Africa’s development partners should consider debt relief and interest rate forbearance over a period of two to three years for all low- and middle-income African countries.
The proposals are expected to be in place and ready for formal approval by the IMF and the World Bank at the spring multilateral meetings on April 15, they said.
Reporting by Joe Bavier; Editing by Nick Macfie, Kirsten Donovan