African finance ministers call for $ 100 billion stimulus and debt cancellation
JOHANNESBURG (Reuters) – African finance ministers have called for a $ 100 billion stimulus package, including a suspension of debt service payments, to help the continent tackle the coronavirus.
Some $ 44 billion would come from non-servicing the debt and they would also use existing facilities from the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions.
Ministers held a virtual conference on Thursday to discuss how to deal with the social and economic impacts of the pandemic on African countries, a statement from the United Nations Economic Commission for Africa said on Monday.
He did not specify which countries attended the meeting.
Africa is facing the combined shock of the coronavirus, which threatens to strain underfunded health systems, as well as a sharp drop in income due to falling oil and commodity prices.
“Africa needs an immediate emergency economic recovery to the tune of $ 100 billion,” the statement said.
The proposed interest payment waiver would include not only interest payments on public debt but also on sovereign bonds. This would save governments around $ 44 billion this year and should eventually be extended in the medium term, he added.
“(A waiver) would provide immediate fiscal space and liquidity for governments in their efforts to respond to the COVID-19 pandemic,” the statement said.
For fragile states, ministers agreed that waiving repayment of principal and interest should be considered.
Although African countries currently only have a fraction of the world’s coronavirus cases, experts fear their cash-strapped and under-equipped health systems are making them ill-prepared to deal with large-scale epidemics.
Meanwhile, sub-Saharan Africa’s debt has swelled to nearly 60% of GDP over the past decade, meaning many governments have to devote significant resources to servicing the debt.
Yet seven countries – Eritrea, Gambia, Mozambique, Republic of Congo, Sao Tome and Principe, South Sudan and Zimbabwe – were already in debt distress before the pandemic, according to the International Monetary Fund.
Nine others, including Ethiopia, Ghana and Cameroon, are at high risk of debt distress.
Reporting by Joe Bavier; Editing by Angus MacSwan