AFRICA CALLS ON G20 TO SUSPEND DEBT REPAYMENT

Fri 25 March 2021:

African finance ministers have called on the G20 countries to suspend debt repayment for low- and middle-income countries.

The call was made in a communique issued on late Tuesday, following the 53rd session of the Conference of African Ministers of Finance under the auspices of the United Nations Economic Commission for Africa.

“With no end to the pandemic in sight, extending the duration of the DSSI [Debt Service Suspension Initiative] at least to the end of 2021, and possibly to the end of 2022 […] and expanding its scope to address the liquidity needs of middle-income countries is vital to pre-empt the larger threat of insolvency, particularly for countries with market access and relatively strong fundamentals,” the communique reads.

“A swift, bold and positive response on special drawing rights (SDRs) in the range of 500 billion to 650 billion [dollars] is now needed to arrest the devastating impact of this externally induced crisis on the continent. We thank the G7 Finance Ministers for instructing the IMF to take further action in this regard on 19 March 2021 and urge all partners to support the G7’s position on SDRs.”

The ministers said in their communique that they were also mindful of the increased importance of private creditors in Africa’s financing landscape, now accounting for 40% of the continent’s total debt, compared to a bilateral debt exposure of 27.6%.

Addressing Africa’s debt and future financing needs will be incomplete without taking into account Africa’s exposure to private creditors, they added.

“But more importantly, the private sector must be a key partner in Africa’s recovery. In this context, blending public and private resources will be vital.”

The DSSI has postponed an estimated $5.1 billion in debt service payments by eligible African countries, providing much needed liquidity to save lives and rebuild livelihoods. The African Development Bank and the World Bank have committed $13 billion and $50 billion, respectively, to support Africa.

Similarly, the IMF has committed $25.6 billion to Africa through the Rapid Credit Facility, the Rapid Financing Instrument and the Extended Credit Facility.

An additional $408 million has been approved through the Catastrophe Containment and Relief Trust (CCRT), bringing total commitments to approximately $26.1 billion.