COVID-19: African Finance Ministers call for debt relief

Addis Ababa

As Africa groan under the yoke of heavy debts, its Finance Ministers have have for debt relief from bilateral, multilateral and commercial partners, due to the ravaging impact of the COVID-19 pandemic, which has nose-dived the world economy into crisis.

Duaglobalnews reports that the ministers’ call form part of the decisions arrived during second virtual meeting of the ministers, including Nigeria, held on Tuesday against the backdrop of rising COVID-19 cases in the continent.

The meeting was hosted by the Executive Secretary of the Economic Commission for Africa (ECA), Vera Songwe, and co-chaired by Ministers Tito Mboweni of South Africa and Ken Ofori-Atta of Ghana.

A statement issued on Wednesday in Addis Ababa by the Communications Section of ECA quoted the ministers as saying that the need for a longer period for debt relief was necessitated by the fact that the global economy had entered a period of ” synchronized slow down, 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, low-income countries (LICs) and middle-income countries (MICs) alike,” they stated.

The ministers also called for the support of multilateral and bilateral financial institutions, such as the International Monetary Fund (IMF), the World Bank Group, and the European Union, to ensure fiscal space required by African countries to deal with the COVID-19 crisis.

The call for debt relief, they added, should be for all of African nations and be undertaken in a coordinated and collaborative way.

The ministers also called for a special purpose vehicle to be created to deal with all sovereign debt obligations.
The Communications Section of ECA further quoted the ministers as saying that:“Substantial drops in revenue from commodity price drops, coupled with increasing costs of imports, are putting pressure on both inflation and the exchange rate.

“Countries shared their experiences and also discussed opportunities for mutual support. While acknowledging the commendable policy measures taken by governments, the ministers underscored that Africa’s economy is facing a deep and synchronized slow down and could take up to three years to turn the corner.”

They stressed the need to take “all possible actions to slow down and bring the spread of COVID-19 under control in the short term but acknowledged this is an uphill battle.
The minister’s said immediate focus must remain on the health and humanitarian front, adding that there was need to continue the awareness-raising, testing, social distancing.

Duaglobalnews, an online publication, gathered many ministers attended the meetings with masks.

They ministers acknowledged the importance of the private sector in job creation and the recovery efforts, even as they called on development finance institutions (DFIs) to support the private sector in this difficult time.

“In addition, since Africa is a net importer of pharmaceutical products, enabling local continental production could serve to protect some jobs and guarantee the supply of essential medicines during the crisis.
“Over 54 countries have banned exports of pharmaceutical products. Ministers called for an end to these procedures,” they disclosed..

The ministers called for joint protocols on border closures to allow for trade and humanitarian corridors and stressed the need for liquidity facilities, refinancing and guarantee facilities to support the private sector.

“The ministers discussed the enormous losses being incurred in the airline and hospitality industry. They called for the protection and preservation of the African airline, logistics tourism industry, including by advocating for a stay on interest, lease, and debt payments.

“This is an important job-creating sector for millions of Africans and must be protected. The ministers agreed to set up a meeting for countries affected by transport and tourism losses due to the pandemic, in order to better plan on policies to combat the losses.
“The ministers welcomed the use of technology such as mobile phones to support awareness-raising, identify communities in need and create accountability and governance mechanisms around the use of the stimulus.

“They asked ECA to work with the telecommunications company to design a system to support these objectives,” the communication experts added.