This is a comparison of hosea that won’t appeal to everyone : Ken Ofori-Atta, the ghanaian minister of Finance, in the first line on the issues of negotiation of the african debt, has set foot in the dish by placing on the same level as the bottleneck suffered by the Afro-American George Floyd with the rules laid down by the main creditors of the continent in these times of health crisis. “The western countries can print 8 000 billions of dollars to support their economies in these times of extraordinary “, while the Africans are judged ” according to the old rules “, he said during a virtual conference organised in early June by the Harvard university. And the minister added : “We really want to shout : I can’t breathe ! “
To the minister of ghana, these last words, pronounced by a man of 46 years died on 25 may under the knee of the police officer Derek Chauvin echo the economic situation of Africa under Covid-19 : with a side impact on populations with a risk for a lot of falling into extreme poverty. And on the other the pressure for african countries to meet their commitments to repay their debt estimated at 365 billion dollars.
His message has been heard ? One thing is for sure, the main creditors of the poorest countries have called on Wednesday, July 8, to do more to ease the burden of their debt, and urged China to fully participate in the exercise, at a high-level ministerial conference.
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Increase the resilience
Opening the debate, the French minister of the Economy Bruno The Mayor congratulated the member countries of the Paris Club, as well as non-members are already associated in April a moratorium on the debt until the end of the year, and called on them to “go further” by extending the moratorium or-in considering the debt restructuring on a case-by-case basis, in a multilateral framework. He reminded the more than twenty ministers present, and the representatives of thirty-nine States invited by the Paris Forum, which brings together countries, creditors and debtors, and the G20, that the poorest countries had seen investors move away in large numbers.
This is why ” certain instruments of the international monetary Fund (IMF) are probably not fully adapted to this crisis unique. We also need instruments to help in the return of investors and access to markets, ” financial, according to the French minister. “We need to find ways to increase the resilience and reduce the dependence of some countries to external financing,” said Bruno Le Maire, who feared a loss of sovereignty and political crises. “This crisis is threatening the sustainable development goals that we had set for 2030 “, he stressed, adding that ” Africa cannot wait.”
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emergency Situation reported
indeed, for the minister Ofori-Atta, a former investment banker at Morgan Stanley in New York, there is an urgency to act. He is requesting a three-year suspension of payments of loan. For his country, the impacts of the health crisis are already very important. The budget deficit of Ghana to 2020 will increase by more than double the legal limit because of the impact of coronavirus on the economy, reversing years of budget discipline which was supposed to mark the end of dependence of the country for emergency financial assistance. The budget gap is expected to widen beyond 10 % of gross domestic product compared with a perspective adjusted to 7.8 per cent in march, said the minister of Finance, Ken Ofori-Atta in an interview in Accra, the capital.
Before the start of the global pandemic, Ghana was expected to be a deficit of 4.7 %, according to the legislation passed two years ago, according to which the deficit should not exceed 5 %. “We were expecting a GDP growth of 6.8%, and we now realize that there will be a sharp decline,” added the minister. In April, the IMF approved a disbursement of approximately one billion us dollars to assist Ghana to meet the “urgent needs in the field of public finance and balance of payments” to which the country is facing. Ghana has confirmed over 20,000 cases and 122 deaths since its first detection of the virus on 12 march.
Essential China
The moratorium on the debt granted in April regarding potentially 73 debtor countries, including 38 in Africa. “We have already 41 countries that have formulated a request at the G20 level,” while the Paris Club “has received 34 applications and has implemented nearly 20 agreements,” said a departmental official French.
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for China, the president of the world Bank David Malpass has insisted on the need ” not to reduce the field of eligible debt in the context of the G20 initiative. It should include all the public loans in the long term as well as loans guaranteed by the State “, including those of state-owned companies. “The participation of the China Development Bank as a creditor official bilateral is important for the initiative to work, especially given that it plays such an important role in the field of development assistance in Africa “, according to the president of the world Bank.
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difficult Situation for the “emerging”
If the emerging countries as a whole have been able to provide 124 billion of bonds in the first half, of which two-thirds from the month of April, for those ” with weak fundamentals, debt levels are very high, economies dependent on tourism or those weakened by conflict, there is no good news “, regretted the director general of the IMF, Kristalina Georgieva. Because “they do not have access” to markets or financing, or ” not at a reasonable cost “, she explained.
in an attempt To restore their sources of financing, the Forum of Paris and the G20 countries, whose Finance ministers are to meet again on 18 July, want to put in place ” partial guarantees on the sovereign debts, in order to strengthen the confidence of investors and the anchor bond rates to a sustainable level “, according to a document released by the finance ministry.
Don’t forget the african private sector
They also put the emphasis on the need to support the african private sector, and in particular SMES. According to Bruno Le Maire, among the assumptions more plausible on future steps, ” the president of the Republic thinks that it might be by the end of 2020, according to the economic situation, an extension of the moratorium of the debt, or a restructuring for some countries “, but he said in an interview with the AFP, ” it will be on a case-by-case basis in a multilateral framework, this is not France that will carry it all alone, the financial cost would be wholly excessive “.
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writing will advise you
Covid-19 : Africa more resilient than expected, Nigeria : “The crisis over Covid-19 can serve as a wake up call” private Debt african : a thorny issue in the context of the Covid-19 “On the debt, we can’t treat the african countries in a homogeneous way” After-Covid-19 : the aftermath of the economic challenges for Africa After-Covid-19 : a historic opportunity to re-invent the development of Africa
