African Countries Seek Debt Relief from IMF, World Bank

• African Countries Seek Debt Relief from IMF, World Bank

In an effort to reduce the impact of coronavirus on African nations, the continent finance ministers have called for debt relief from bilateral, multilateral and commercial partners.

The finance ministers said the debt relief should be done with the support of multilateral and bilateral financial institutions such as the International Monetary Fund, the World Bank Group, and the European Union, among others.

In the second virtual meeting hosted by the Executive Secretary of the Economic Commission for Africa, Vera Songwe; and co-chaired by Minister of Finance of South Africa, Tito Mboweni, and that of Ghana Ken Ofori-Atta, the finance ministers said the move would ensure that African nations have enough fiscal space to deal with the negative impact of COVID-19.

The finance ministers said African nations partners should consider debt relief and forbearance of interest payments for a period of two to three years.

They also emphasised the urgent need for at least $100 billion emergence financing to curb the effect of COVID-19 on the continent.

In the statement issued by the ECA, the ministers “called for debt relief from bilateral, multilateral and commercial partners with the support of the multilateral and bilateral financial institutions such as the IMF, WBG, EU to ensure that African countries get fiscal space required to deal with the COVID-19 crisis.

“They called for a special purpose vehicle to be created to deal with all sovereign debt obligations. Substantial drops in revenue from commodity price drops coupled with increasing costs of imports is putting pressures on both inflation and the exchange rate.

“Given that the global economy has entered a period of a synchronised slowdown, with recovery only expected after about 24 to 36 months, development partners should consider debt relief and forbearance of interest payments over a two to three-year period for all African countries.”