AFRICAN economies could swing into a depression without a debt moratorium of at least three years, says Ghana’s Finance Minister Ken Ofori-Atta.
‘If we don’t intervene in Africa and manage a way for pushing this debt servicing out for at least three years, are we going to move into a depression and then make the tail of recovery a lot longer than it should be?’ Ofori-Atta said on Wednesday on a virtual conference organised by the Harvard University Centre for African Studies.
Countries in the region need the debt standstill to free up funds to revitalise economies battered by the coronavirus pandemic, Ofori-Atta said. The idea of Africa servicing ‘$44bn of loans within one year is just not possible,’ he said.
Ofori-Atta has led a group of African finance ministers supporting a debt-relief proposal engineered by the UN Economic Commission for Africa (Uneca). The Uneca and the finance chiefs initially said the continent will need a stimulus package of $100bn — including $44bn in debt-servicing waivers — to face the virus. President Cyril Ramaphosa, who chairs the AU, said last week the continent could get more than $200bn in additional support from the UN’s call for a global response package amounting to at least 10 percent of the world’s GDP.
The World Bank said in April sub-Saharan Africa will suffer its first recession in 25 years with GDP contracting between 2.1 percent and 5.1 percent.
The Group of 20 leading economies in April agreed to grant a debt waiver of about $20bn until the end of 2020. The IMF and some G20 members have supported an AU idea to extend the waiver to two years.
Debt-relief talks are getting ‘extremely’ difficult due to a growing sense that the pandemic has slowed, Ofori-Atta said. Meanwhile, credit rating agencies are still looking at the vulnerabilities of African countries’ balance sheets, he said. ‘Suddenly the Western world can print $8-trillion to support their economies in these extraordinary times,’ while Africans are judged ‘by the old rules,’ he said. ‘You really feel like shouting “I can’t breathe”.’