G20 must provide immediate debt relief and ensure financing flows to save African people from a massive COVID-19 crisis
Oxfam welcomes the decision by the G20 leaders to hold a virtual Extra- Ordinary Summit to respond to the health crisis and an economic recession triggered by Covid 19. The G20 leaders meeting today cannot afford to ignore calls for a debt moratorium for African countries in order to save lives now and give a lifeline to the many Africans whose livelihoods have been disrupted by the pandemic.
Speaking today ahead of the virtual Summit, Peter Kamalingin, Oxfam Pan Africa Director said: “This is the moment that Africa needs to use all its existing resources to cope with the emergency. It makes no sense for African countries to transfer much-needed resources to foreign banks, developed nations with capacity to cope with the pandemic, or international institutions.”
Africa is facing the worst health and economic crisis in decades amidst declining tax revenues, diminishing official development assistance, and rising debt obligations and costs. The slump in commodity prices and disruption of global supply chains, especially in China, as a result of the pandemic, is already hitting African economies hardest.
Calls for debt relief this week from the World Bank (WB) and International Monetary Fund (IMF) must be welcome as a first step, but do not meet the needs of African people in this life-threatening crisis. The proposal by the WB and IMF that “only bilateral debts need to be suspended” will guarantee much-needed money continues to flow out of the continent (multilateral and private lenders hold most of the debts). Africa Finance Ministers make more sense requesting a coordinated waiver on all interest payments, amounting to US$44bn for 2020, which could provide more fiscal space for governments as they respond to the pandemic. Even that is too small.
No African country can afford to make any debt repayments in 2020 - whether owed to bilateral creditors, multilateral institutions or private lenders without putting millions of African lives at risk. New money will not be available for refinancing at least in the short term and most likely in the medium term. A universal debt repayment suspension needs to be put in place to allow African countries to focus in strengthening their public health systems to adequately respond to the COVID-19 crisis and provide social protection to the most vulnerable. Suspending all debt payments is the fastest way to keep money in countries and free up resources to tackle the health and economic crises.
“Decisions need to be taken now, any delay only serves to worsen the already fragile situation and make the recovery process more expensive. Debt relief free from conditionalities is the best way to leave money in the hands of African governments to make decisions now” added Mr. Kamalingin.
The measures that the G20 takes today must be those that ensure African governments have the resources needed to respond to the crisis. The COVID-19 crisis is collapsing health systems and threatening economies in the developed world, and they are using unlimited monetary expansion, something never seen before, to address their own needs. Africa also needs a global response the like of which our world has never seen.
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