Ministers from governments across Africa have requested suspension interest payments on debt as the Covid-19 crisis worsens.
The number of cases reported in Africa are still behind Europe and the United States, but increases are confirmed in South Africa, Kenya, Egypt, Algeria and Burkina Faso, among others, and there are fears of the economic consequences that the pandemic could to have.
Monday, the heads of the world Bank and the International Monetary Fund has expressed support for debt relief to help countries strengthen their health systems in anticipation.
In a conference call for G20 ministers on Monday, IMF leader Kristalina Georgieva highlighted the replenishment of funds used in a mechanism for debt relief and aid during the Ebola epidemic of 2014 which hit three African countries.
Ministers also called for principal payments – the actual payment of debt, as opposed to interest charges – to be removed for fragile states, where people are deeply vulnerable to a pandemic.
Tim Jones, policy officer for the Jubilee Debt Campaign, said extending a moratorium on actual payments due this year would be the “fastest way to keep money in African countries.”
“All creditors must react quickly by accepting this appeal,” he said.
David Malpass, head of the World Bank, also supported a suspension of all debt payments for the poorest countries. But he went on to say that countries should implement free market economic policies, such as removing regulations and subsidies.
This is consistent with the bank’s long-term approach, but contrasts directly with the sharp increase in state intervention in countries like the UK, where rail services have been temporarily renationalized and workers and businesses are offered support during the crisis. The G7 also promised “requisites”As the global economy heads into recession.
Jones said the head of the World Bank should “act first to suspend payments on the debt over which he has control, then call on other creditors to join him.”
“It is scandalous that David Malpass is using this crisis to push an extreme economic ideology, at a time when state intervention is more than ever necessary to fight this health and economic crisis,” he said.
Jesse Griffiths, Program Director at ODI thinktank, takes over the call. “Now is the time to act boldly and it must come unconditionally. Lenders should not delay or impose conditions on emergency aid at a time like this, ”he said.
“These countries are going to be hit very hard by the economic slowdown in the rest of the world, including China. Commodity prices have collapsed, trade stops. There is going to be a huge debt crisis across the continent.
According to calculations from the Jubilee Debt Campaign, the 76 countries mentioned by Malpass are expected to spend $ 18.1 billion (£ 15.5 billion) this year to repay debt to other governments, $ 12.4 billion multilateral institutions and $ 10.1 billion to external private creditors.