On Tuesday the 31st of March, African finance ministers in a video conference, called on the International Monetary Fund (IMF), World Bank and the European Union’s support for bilateral, multilateral and commercial debt relief amid the coronavirus crisis, the UN Economic Commission for Africa (UNECA) said.
Africa is facing an impending global economic downturn, plummeting oil and commodity prices and weaker currencies which threaten to imperil its coronavirus response as well as its inability to pay off debts. This led the African governments to request for immediate relief from debt service obligations and would like to see a portion of their debts forgiven or converted into long-term, low-interest loans.
The meeting was hosted by UNECA and was co-chaired by South African Finance Minister Tito Mboweni and Ken Ofori-Atta of Ghana, the ministers met via video conference. According to UNECA’s statement, “the call for debt relief … should be for all of Africa and should be undertaken in a coordinated and collaborative way.”
The ministers agreed that Africa’s development partners should consider debt relief and interest rate forbearance over a two to three-year period for all African low-income and medium-income countries. The proposals should be in place and ready for formal approval by the IMF and World Bank at the multilateral’ spring meetings on April 15.
However, there might be complications to the relief of Africa’s debt, as Africa’s creditor landscape includes traditional bilateral and multilateral lenders, China, commercial banks, commodity traders and bondholders. According to data by the UK-based Jubilee Debt Campaign, 55 percent of external interest payments are to private creditors.
Prior to this, the IMF and World Bank called on governments to offer immediate debt relief to the world’s poorest countries, as a form of assistance in tackling the coronavirus outbreak.
David Malpass, president of the World Bank said that “These are difficult times for all, especially for the poorest and most vulnerable, our first goal is to provide prompt support during the crisis, based on a country’s needs.”
The pandemic will put unsustainable pressure on governments with public finances already under stress and with health systems ill-prepared for the crisis. Many poor countries are under intense pressure as the global scramble for dollars drives down the value of their currencies, making it harder to finance dollar-denominated debts. Some have also been hit by the big fall in commodity prices and the slump in global tourism.
Africa’s confirmed coronavirus cases had climbed to at least 5,300 by Tuesday, with more than 170 recorded deaths, according to a Reuters tally. And while those figures constitute just a fraction of current global cases, experts worry that Africa’s creaking health systems could easily be overwhelmed.
For Africa, debt relief will create funds for countries to spend immediately on providing quality health care systems, and stabilizing its economy,
