Ministers of Finance from Nigeria and other African countries have called for debt relief from bilateral, multilateral and commercial partners, due to the ravaging impact of the COVID-19 pandemic, which has plunged the world into an economic crisis.
The request for debt relief formed part of the decisions arrived at during second virtual meeting of the ministers held on Tuesday against the backdrop of rising COVID-19 cases in the continent.
The meeting was hosted by the Executive Secretary of the Economic Commission for Africa (ECA), Vera Songwe, and co-chaired by Ministers Tito Mboweni of South Africa and Ken Ofori-Atta of Ghana.
A statement issued wednesday in Addis Ababa by the Communications Section of ECA quoted the ministers as saying that the need for a longer period for debt relief is necessitated by the fact that the global economy has entered a period of synchronized slow down, with recovery only expected after about 24 to 36 months.
“Development partners should consider debt relief and forbearance of interest payments over a two to three-year period for all African countries, low-income countries (LICs) and middle-income countries (MICs) alike,” they stated.
The ministers also called for the support of multilateral and bilateral financial institutions such as the International Monetary Fund (IMF), the World Bank Group, and the European Union, to ensure fiscal space required by African countries to deal with the COVID-19 crisis.
The call for debt relief, they added, should be for all of African nations and should be undertaken in a coordinated and collaborative way.
The ministers called for a special purpose vehicle to be created to deal with all sovereign debt obligations.
“Substantial drops in revenue from commodity price drops coupled with increasing costs of imports are putting pressure on both inflation and the exchange rate.
“Countries shared their experiences and also discussed opportunities for mutual support. While acknowledging the commendable policy measures taken by governments, the ministers underscored that Africa’s economy is facing a deep and synchronized slow down and could take up to three years to turn the corner,” the statement added.
The ministers stressed the need to take “all possible actions to slow down and bring the spread of COVID-19 under control in the short term but acknowledged this is an uphill battle.
“The immediate focus must remain on the health and humanitarian front. There is a need to continue the awareness-raising, testing, social distancing. Many ministers joined the meetings with masks,” the statement said.
The ministers acknowledged the importance of the private sector in job creation and the recovery efforts, even as they called on development finance institutions (DFIs) to support the private sector in this difficult time.
“In addition, since Africa is a net importer of pharmaceutical products, enabling local continental production could serve to protect some jobs and guarantee the supply of essential medicines during the crisis. Over 54 countries have banned exports of pharmaceutical products. Ministers called for an end to these procedures.
“Ministers called for joint protocols on border closures to allow for trade and humanitarian corridors. There is a need for liquidity facilities, refinancing and guarantee facilities to support the private sector.
“The ministers discussed the enormous losses being incurred in the airline and hospitality industry. They called for the protection and preservation of the African airline, logistics tourism industry, including by advocating for a stay on interest, lease, and debt payments.
“This is an important job-creating sector for millions of Africans and must be protected. The ministers agreed to set up a meeting for countries affected by transport and tourism losses due to the pandemic, in order to better plan on policies to combat the losses.
“The ministers welcomed the use of technology such as mobile phones to support awareness-raising, identify communities in need and create accountability and governance mechanisms around the use of the stimulus.
“They asked ECA to work with the telecommunications company to design a system to support these objectives,” the statement added.