ADDIS ABABA, Ethiopia — Africa wants the G20 to go further in helping the world’s poorest countries survive the coronavirus crisis despite the group agreeing to suspend debt payments until the end of the year, officials said.
Finance ministers and central bank governors of the world’s largest economies held a virtual meeting on Wednesday to agree on ways they could help countries in Africa and elsewhere to free up liquidity and invest more in their health systems and economic recovery.
They agreed to suspend the terms on poor countries’ debt from May 1 until the end of the year, with an option to extend until the end of 2021 if needed. But faced with a recession and rising fiscal deficits, many African capitals feel the current deal does not stretch far enough.
Ngozi Okonjo-Iweala, one of four special envoys to the African Union to solicit G20 support in dealing with the coronavirus, said Africa would need additional help in order to guarantee the livelihoods of millions of people. The International Monetary Fund on Wednesday said sub-Saharan Africa’s gross domestic product would shrink this year by 1.6 percent due to the effects of the coronavirus, low oil prices and poor commodity prices.
“It’s a good opening for discussion. My belief is that until the end of this year will not be adequate. We need a two-year time scale,” she said referring to the moratorium on Africa’s debt. “I think that is what will give African countries the breathing room to be able to deal with the enormous consequences of the pandemic.”
Stephen Karingi, director of the trade division at the U.N.’s Economic Commission for Africa, said support from the international community should be “weighed against the damage COVID-19 will cause” in Africa.
“We think that 2020 and 2021 will be difficult and support should have that in mind or such a horizon,” Karingi said.
In Ethiopia, the Job Creation Commission has estimated 1.4 million jobs are likely to be lost over the next three months, according to a document seen by POLITICO.
In Europe, there are proponents for greater assistance to Africa. Officials in both France and Germany have said debt relief measures will likely need to be extended, while President Emmanuel Macron has spoken in favor of “massively canceling” a portion of Africa’s debt load.
China is less favorable to providing blanket relief to poor countries and prefers to operate bilaterally, according to two diplomats in Addis Ababa briefed on the talks. The China’s mission to the African Union did not reply to questions on Africa’s debt.
Okonjo-Iweala said that while there is a standstill on payments the World Bank and IMF should study debt sustainability and come up with a framework where it could be restructured. And on the Chinese position, she said Beijing was “coming along.”
“I don’t believe it’s against supporting African countries on this. I’ve heard actually to the contrary,” she said. “What we need from China is not a case-by-case examination, but an across-the-board agreement.”
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