African nations (via their ministers) have agreed to call a debt relief support from bilateral, multilateral and commercial partners with the support of the multilateral and bilateral financial institutions such as the International Monetary Fund (IMF), the World Bank Group, and European Union (EU), amid coronavirus outbreak (COVID-19) United Nations Economic Commission for Africa (UNECA) revealed in a statement.
The agreement was germinated from the second virtual meeting on Tuesday, hosted by Vera Songwe, Executive Secretary of the Economic Commission for Africa, and co-chaired by Ministers Tito Mboweni of South Africa and Ken Ofori-Atta of Ghana.
The meeting stressed the need to take possible actions to downplay and bring the spread of COVID-19 under control in the short term.
“The call for debt relief, it was emphasized, should be for all of Africa and should be undertaken in a coordinated and collaborative way. They 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 is putting pressure on both inflation and the exchange rate,” the statement read in part
The request comes amid the hardest time in the history of the globe, as the continent has already registered more than 5,000 cases of the COVID-19 from various nations, and over 200 death reported.
Further, the statement revealed that the need for a longer period for debt relief is required. Given that the global economy has entered a period of a 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 2 to 3 years for all African countries.
However, in an initial meeting organized by UNECA last month, ministers called for a $100 billion stimulus package, including a suspension of debt service payments.