This is a long process and time-consuming, and all countries know this well. After Nepal, Dominica and Grenada, it is the turn of Mali to sign the moratorium with the Paris Club after the decision of the G20 to suspend this year’s debt service, thus becoming the first african country among the 41 eligible. It is the French Finance ministry has confirmed the information on Tuesday, may 19. “We have already four countries that have signed the moratorium with the Paris Club,” said a source from the ministry. To explain this slight delay, some point to the willingness of countries to discuss with rating agencies downstream to ensure that there is no impact on their rating. Experts and economists fear that the one-year moratorium, announced on April 15, and on which the G20 has called on private creditors to participate, do farm-to-market of the debt of these countries or only grows on the rating agencies to downgrade the debt.
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First response to the economic emergency
The same source cited by AFP said that 20 other countries were currently in a phase of ” finalization of the documents to sign, in their turn, an agreement with the Paris Club. According to a source close to the dossier, Pakistan, Ethiopia, the democratic Republic of the Congo, Congo-Brazzaville, Cameroon and Mauritania are about to get a moratorium.
In total, 77 countries are eligible for the moratorium granted as a result of the crisis of the sars coronavirus. “We expect that a few dozen additional countries we send their application in the next few days,” added the French source, noting however that this moratorium was “a temporary suspension” and that ” the money was intended to be repaid later “.
“The sums not paid in 2020 will be paid in three years on 2022, 2023 and 2024, after a year away in 2021,” explained the same source, noting that 41 of the 49 countries in sub-saharan Africa were eligible for the moratorium. In total, for all of those 41 african countries, the maturities coming due this year amounted to $ 19 billion, or nearly half of the total $ 36 billion, for a total of 77 eligible countries.
For the Mali, this payment deferral will save an estimated $ 23 billion CFA francs, for which payment will be spread over four years from the end of the suspension of debt service. If all the other bilateral creditors of Mali adhered to the initiative, the total amount of the deferral of the payment would be $ 33.2 billion francs CFA.
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What’s next ?
In mid-April, the 22-Paris Club creditors and the creditors of the emerging markets, including countries such as China, India, saudi Arabia, Turkey or South Africa, have agreed to suspend payments on the debt service for the benefit of the poorest countries. The G20 believes that the suspension of the payment of the debt frees up $ 20 billion in total that these countries can devote to combat the impact of the pandemic Covid-19.
The Club of Paris, founded in 1956, is an “informal group” of countries called ” industrialized “, among which France, the United States, Germany, Japan or even Switzerland. This multilateral institution aims to allow ” for creditors to recover their claims in arrears and to find an effective and expeditious solution to the sovereign debt crisis “.
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