Ethiopia, Chad and the Republic of Congo are the last three States plus Pakistan to have received the green light from the Paris Club for a moratorium on debt service, bringing to eight the number of african countries have signed the memorandum of understanding on the subject since mid-April. The news was confirmed on Tuesday 9 June by a press release.
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8 african States
“the representatives of The creditor countries of the Paris Club have agreed to give” to ” the Republic of the Congo “, to ” the federal democratic Republic of Ethiopia “, the “Republic of Chad” a “suspension of the debt service for a specified period, from 1 may to 31 December 2020 said,” in four separate releases, including the Paris Club, which brings together the informal group of creditors of these countries.
the Face of a severe downturn in the economy, the G20 had taken in mid-April the decision is unprecedented to suspend for one year the debt repayments of the poorest countries weakened by the pandemic – an initiative that has been established over 22 countries of the Paris Club, as well as by a handful of creditors are emerging (China, India, saudi Arabia, Turkey, South Africa).
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on the side Of the Paris Club, which brings together since 1956, countries called “industrialized” such as France, the United States, Germany or Japan, it refers to “an accelerated phase” : it received 31 requests, including 22 countries in sub-saharan Africa.
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A little oxygen to the african economies
in Mid-may, the first country to benefit from a moratorium has been Mali ; Nepal, Grenada, Dominica, Cameroon, Mauritania, Burkina Faso and Niger have followed, before the four recipients announced Tuesday. “Among these countries, 12 countries have now signed a memorandum of agreement with the Paris Club. For these 12 countries, the total amount of maturities in 2020 and the deferred has reached about $ 1.1 billion to date, plus the deferral of arrears and pre-existing, ” added the Paris Club. 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 “.
“This is a year of grace in 2021, without a service due on these reports, and then spread to repay these maturities from 2022 to 2024,” said Wednesday the president of the Club of Paris, Odile Renaud-Basso, during a conference call. “The objective is that the fiscal buffers are used to cover urgent expenses or health support to the activity. “
Ten-nine other countries have also called for a moratorium to the Paris Club ; their records should be ” completed quickly “, she observed.
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Not yet a question of debt cancellation
it is a breath of fresh air for the countries concerned, their financial burden is only suspended, and their enthusiasm is sometimes measured. “The suspension of debts (…) omen already a good step, but we would have hoped that the countries of the Paris Club to proceed purely and simply to the cancellation of the debts of african countries, particularly that of Chad, which is facing an imperative safe “, said Wednesday AFP the spokesman of the chadian government, Oumar Yaya Hissein.
The report proposed a mid-April represents only a small part of the total debt of the african continent estimated at 365 billion dollars, of which about one-third due to the ‘one China’ policy.
The moratorium on the debt ” is a useful (but) for many countries, the moratorium will (…) turn into a cancellation program “, was hammered in April the president of the world Bank David Malpass. In the Face of these reserves, is not out of the side of the creditors of the extra effort.
the End of 2020, “we will have a better visibility, we will identify better what are the countries that will need treatment more structuring of relief, with a potential reduction of the debt,” insists Mrs Renaud-Basso.
Currently, the initiative for a moratorium regarding potentially 73 debtor countries, including 38 sub-saharan Africa. “It is very likely that there will be additional requests (…) After having had a position extremely cautious at the outset, the country now seem to be more open,” she noted.
Some developing countries were extremely concerned to see the rating of their debt, their credibility and their access to financial markets affected if they had a moratorium on wrong according to the Paris Club.
At the level of the powers of the G20, 36 countries in total had made a request for a moratorium at the end of may. But unlike the Paris Club, where a single chord is a simultaneous and very coordinated, committed 22 creditor countries, the other countries in the G20 to negotiate each in a bilateral framework with each debtor.
” China is (…) does the job. A concern, is that it has multiple and development banks, it is an exercise quite new to it (…) But it is on the right track, ” said Odile Renaud-Basso.
Finally, the private creditors have been called to join the general effort of moratorium, on a voluntary basis.
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