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Africa urgently needs $100b to avert further Coronavirus pandemic —African Ministers of Finance

AFRICAN Ministers of Finance have said that Africa urgently needs $100 billion to fight the further negative impact of the coronavirus in the continent.

This was part of the resolutions made by African Ministers of Finance on March 19 at the end of a virtual conference held to exchange ideas on the efforts of their respective governments in dealing with the social and economic impacts of COVID-19.

They noted that even before the COVID-19 pandemic, Africa was already experiencing a huge financing gap in funding measures and programmes aimed at realizing SDGs and Agenda 2063 targets and goals.

The Ministers emphasized that without coordinated efforts, the COVID-19 pandemic would have major and adverse implications on African economies and the society at large.

Original economic forecasts in most economies are on average, being downgraded by 2-3 percentage points for 2020 due to the pandemic.

They unanimously agreed that Africa needs an immediate emergency economic stimulus to the tune of US$100 billion.

According to them, the waiver of all interest payments, estimated at US$44 billion for 2020, and the possible extension of the waiver to the medium term, would provide immediate fiscal space and liquidity to the governments, in their efforts to respond to the COVID-19 pandemic.

The interest payments waiver should include not only interest payments on public debt, but also on sovereign bonds.

For fragile states, the ministers agreed on the need to consider waiving principal and interest and encourage the use of existing facilities in the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions.

According to the Commission, almost half of this money could come from waivering interest payment for countries on the continent.

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Government debt as a percentage of gross domestic product (GDP) in sub-Saharan Africa has doubled in the past decade but countries in the region will have to shelve plans for further Eurobond issuance as yields surge and the spread of the coronavirus limits travel.

Data compiled by the U.K.-based Jubilee Debt Campaign showed that external debt payments consumed an average of 13 per cent of African governments’ revenue before the outbreak.

Given the limited health infrastructure and the fact that most of the pharmaceuticals and medical supplies consumed in Africa are imported, they called on the international community to support the upgrade of the health infrastructure and to provide direct support to the existing facilities.

The Ministers underscored the need to support the private sector and protect the over 30 million jobs at risk, particularly in the tourism and airline sectors across the continent.

In other critical sectors including agriculture, imports and exports, pharmaceuticals and in banking, the ministers agreed that all interest and principal payments on corporate debt, leases, extended credit facilities, refinancing schemes and guarantee facilities should be used to waive, restructure and provide additional liquidity in 2020.

A liquidity line should also be made available to the private sector to ensure the continuity of essential purchases and all Small and Medium Enterprises (SMEs) that are dependent on trade can continue to function.

As part of an immediate health response, there is a need for a coordinated response in the logistics and delivery of testing equipment.

In this regard, the ministers emphasized the need to work with the WHO and existing continental institutions, in particular, the African Union and Africa CDC, while making maximum use of existing systems and funding partners, such as the Global Fund.

Particular attention should be placed on fragile states and vulnerable populations, especially women and children and those living in informal urban settlements.

 

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