JOHANNESBURG (Reuters) – African finance ministers have called for a $100 billion stimulus package, including a suspension of debt service payments, to help the continent fight the coronavirus.
Some $44 billion would come from non-debt servicing and they would also tap existing facilities from the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions.
Ministers held a virtual conference on Thursday to discuss how to address the social and economic impacts of the pandemic on African nations, a statement from the United Nations Economic Commission for Africa said on Monday.
He did not specify which countries participated in the meeting.
Africa is facing the combined shock of the coronavirus, which threatens to strain underfunded health systems, as well as a sharp drop in income from falling oil and commodity prices.
“Africa needs an immediate emergency economic stimulus to the tune of $100 billion,” the statement said.
The proposed interest payment exemption would include not only interest payments on government debt, but also on sovereign bonds. This would save governments about $44 billion this year and may need to be extended in the medium term, he added.
“(A waiver) would provide immediate fiscal space and liquidity to governments in their efforts to respond to the COVID-19 pandemic,” the statement said.
For fragile states, ministers agreed to consider waiving repayment of principal and interest.
Although African countries currently have only a fraction of the world’s coronavirus cases, experts fear their cash-strapped and under-resourced health systems are making them ill-prepared to deal with large-scale outbreaks.
Meanwhile, Sub-Saharan Africa’s debt has soared to nearly 60% of GDP over the past decade, meaning that many governments have to devote significant resources to servicing debt.
Yet seven countries – Eritrea, Gambia, Mozambique, Republic of Congo, Sao Tome and Principe, South Sudan and Zimbabwe – were already over-indebted before the pandemic, according to the International Monetary Fund.
Nine others, including Ethiopia, Ghana and Cameroon, are at high risk of debt distress.
Reporting by Joe Bavier; Editing by Angus MacSwan
