French President Emmanuel Macron on Wednesday called for a global moratorium on debt repayments by African countries, amid warnings that sub-Saharan Africa is headed for its worst economic performance in at least 50 years due to the coronavirus pandemic.
Macron said that he hoped a virtual meeting on Wednesday of finance ministers from the G20 industrialised countries and emerging economies could agree on the moratorium.
It should involve all major Western powers, China, Russia and the Gulf States, as well as multilateral lenders, Macron said.
Developed countries had all responded to the crisis with massive monetary and budgetary action, but Africa’s large debts as well as credit flight made such moves harder there, he said.
“Every year a third of Africa’s commercial exports go to service its debt,” he argued. “It’s crazy!”
Macron said he favoured a large-scale cancellation of African countries’ debts, but the AU considered that a moratorium was more likely to find agreement in the short term.
The International Monetary Fund (IMF) predicted on Wednesday that sub-Saharan Africa’s economy is now set to shrink by 1.6 per cent this year, according to the head of its African Department, Abebe Selassie.
This is the worst performance seen since at least 1970, Selassie said.
“The possibility that growth could contract more still is quite high. No country will be spared,’’ he said.
He spoke of a “poisonous cocktail of shocks,” including the economic impact of restrictions that have been imposed to curb the spread of the new coronavirus.
And also falls in remittance flows, tourism, investment and demand for the region’s goods and services.
“A contraction in the size of the economy means that there’s less income that is being generated and that will translate into a decline in standards of living,” he said.
“I cannot stress how significant the threat to the region is,” he added.
“This crisis is unprecedented and equally calls for bold and decisive support from the international community.”
The IMF is set to provide about 11.5 billion dollars in new financing and debt relief to 32 sub-Saharan countries that have already requested help, he said.
Governments, multilateral institutions, philanthropic groups, non-governmental organizations and private businesses should all “join forces in an unprecedented effort to consolidate Africa’s health defences,” more than a dozen African and European leaders said on Tuesday.
They called for a stimulus package of at least 100 billion dollars to give African countries “the fiscal space they need to devote more public health resources to fighting the virus, while mitigating its economic and social consequences.”
“This crisis has shown how interconnected we all are. No region can win the battle against COVID-19 alone.
“If it is not beaten in Africa, it will return to haunt us all,” the leaders warned.
Africa has so far recorded around 16,000 cases and 875 deaths, according to the continent’s Centres for Disease Control and Prevention.
Macron said there was no guarantee that African countries would continue to be spared the worst of the pandemic, but Europe would be better placed to help if the peak in Africa came after European countries had got over the worst of it.
African leaders should try and delay the epidemic on their soil with measures such as lockdowns, he suggested.
