Faced with the threat of losing at least two to three percent of gross domestic product this year due to the coronavirus (COVID-19) outbreak, African leaders have tendered a comprehensive request to the international financial community which among others includes an appeal for a $100 billion bailout package.
“Africa needs huge and immediate additional resources of $100 billion for the immediate response, with lead from the multilateral financial institutions,” an appeal signed by Ghanaian finance minister Ken Ofori-Atta and South African counterpart Tito Mboweni said.
The requested fund is to be deployed in protecting the region’s economies from economic disruption caused by the pandemic. Africa has lost nearly $30 billion worth of GDP due to COVID-19, according to the United Nations Economic Commission for Africa, and the loss could rise in the coming months as countries in the region report more cases of the virus.
As detailed in the report, released by UNECA executive secretary Vera Songwe on behalf of African heads of finance, the minsters want the bailout package disbursed in the form of suspension of debt service payments, budget support, and extended credit facilities, The EastAfrican reported.
The goal is to get development partners to waive interest payments on debt – including public debt and sovereign bonds – amounting to $44 billion for 2020. Such a waiver would provide countries with fiscal space and enough liquidity to respond to the pandemic.
Africa also wants a waiver of interest payments on trade credits, corporate bonds, lease payments and activation of liquidity lines for central banks to ensure countries and businesses can continue to purchase essential commodities without weakening the banking sector. This, according to Songwe, should be coupled with “policies to keep businesses open in order to maintain jobs.”
In addition to debt relief, the continent also wants intervention for its weak healthcare systems that could be overwhelmed in case of an exponential rise in infections. The ministers appealed for healthcare funding, including the activation of the Global Fund, grant funding and safety nets for the most vulnerable including women and children, and ensuring the availability of testing material.
The ministers are also calling for a waiver of remittance fees considering the expected slowdown of major economies across the world that are the source of remittances to Africa. Waiving remittance fees will help “mitigate against the expected decline in amounts sent,” said the UNECA boss.
Despite repeated calls by heads of state for debt relief amid the COVID-19 outbreak, Africa faces a huge task of getting the needed relief that would “allow governments to pump resources into creaking healthcare systems and shield economies against the fallout from the pandemic,” Reuters said. This is because the continent’s creditor landscape has become far more complex in recent times.
Dated March 22, the appeal was addressed to the World Bank, the International Monetary Fund, the European Investment Bank, European Central Bank, the African Development Bank, Afreximbank, other partner institutions, and regional development banks.