On Tuesday in Paris, at a conference convened by French President Emmanuel Macron, the heads of state of several African nations met with the chiefs of international funding organisations. The meeting was aimed at discussing debt relief for the continent to curb the financial impact of the ongoing pandemic.
Earlier this year, the International Monetary Fund (IMF) estimated that Africa has a “financial gap” of $300 billion and warned that this could grow in the face of the damage brought on by the pandemic. Furthermore, the African Development Bank has said that more than 39 million people could be pushed into poverty this year. Against this backdrop, Macron has called for African nations to be offered a “New Deal”.
In April, the G-20 announced a suspension on debt payments until the end of the year. France, however, has also proposed that the IMF allow African countries to access a greater proportion of the Fund’s Special Drawing Rights (SDRs) so as to enable them to “continue providing crucial services.”
Next month, the IMF will decide on whether to issue $650 billion in SDRs, of which only $33 billion is reserved for Africa. France has opined that a larger proportion of these funds, particularly those reserved for richer countries, should be reallocated to Africa, which would bring the amount reserved for the continent to $100 billion.
An official from within the Macron administration said ahead of Tuesday’s summit: “The president has spoken of massive debt cancellations, and continues to think that it is very important to give liquidity to African countries and allow them to invest.”
While some countries have proposed a moratorium on loans until the end of the pandemic, some African argue that the issue is not the deadline for repayment but the interest rates. The president of the West African Development Bank (BOAD), Serge Ekue, said that Africa required loan maturities that extend beyond seven years and for interest rates to be capped at 3% rather than 6%.
Ekue told AFP: “The issue is […] not so much a moratorium as obtaining low rates. Because it is better to issue new, cheaper and longer debt than to obtain a suspension.
Keeping all this in mind, IMF chief Kristalina Georgieva said on Tuesday, “We’re gathered here to reverse what has developed as a very dangerous divergence between advanced economies and developing countries, especially (in) Africa.”
She remarked that Africa’s economic output in 2021 would only increase by 3.2%, compared with the global average of 6%. Georgieva said that Africa needs to “grow faster than the world” and maintain a growth rate of between 7-10%. The IMF chief said that this must be complemented by the efforts of African governments to “increase domestic revenue, improve public services, and strengthen governance.”
She further echoed Macron’s call for 40% of the continent to be vaccinated by the end of the year, and 60% by mid-2022, so as to allow for a quicker resumption of economic activities. However, she said that Africa’s SDRs would remain at $33 billion, despite Macron’s pleas.
The conference was also attended by World Bank Managing Director Axel von Trotsenburg, German Foreign Minister Heiko Maas, and EU foreign policy chief Josep Borrell.
On Monday, ahead of the Summit, France announced a $1.5 billion bridge loan to Sudan to help the country pay off its arrears to the International Monetary Fund (IMF). It is thought that this loan could lead to Sudan’s debt being forgiven under the IMF and World Bank’s Highly Indebted Poor Countries (HIPC) provision.
In parallel developments, the AFP’s Fact Check team has sought to debunk social media posts that suggest that the Africa-France Finance Summit had been postponed. In truth, the Africa-France Summit that is being referred to in some posts by Nigerian social media users refers to a separate Africa-France Summit that is scheduled to take place in Montpellier, not in Paris like this week’s meeting. That summit has indeed been postponed from July to October, but is a separate summit altogether.
IMF Chief Georgieva Ignores Macron’s Call to Increase Special Drawing Rights for Africa
The IMF has ignored French President Emmanuel Macron’s push for the special drawing rights of rich countries to be reallocated to African nations.
May 19, 2021
IMAGE SOURCE: KACPER PEMPEL / REUTERSIMF chief Kristalina Georgieva