South African Minister of Finance Tito Mboweni delivers his 2019 Budget
Speech in the South African Parliament, on February 20, 2019, in Cape
Town. PHOTO | RODGER BOSCH | AFP
African finance ministers have appealed for a $100 billion
bailout package from international lenders to cushion their economies
from effects of the coronavirus pandemic, which has put the entire
continent in virtual lockdown.
In an appeal signed by
South African Minister for Finance Tito Mboweni and his Ghanaian
counterpart Ken Ofori-Atta, the African governments estimate that the
economic disruption from the spread of coronavirus will cut the
continent’s GDP by at least two to three percentage points this year.
“Africa
needs huge and immediate additional resources of $100 billion for the
immediate response, with lead from the multi-lateral financial
institutions,” reads the report released by Vera Songwe, executive
secretary of the United Nations Economic Commission for Africa (UN ECA),
on behalf of African Ministers of Finance.
Dated March
22, the appeal is addressed to the World Bank, the International
Monetary Fund (IMF), the European Investment Bank, European Central Bank
(ECB), the African Development Bank and other partner institutions like
Afreximbank and regional development banks.
Lost GDP
Although the impact of Covid-19 on Africa is yet to reach the levels experienced in Europe, Asia and North America, the continent has so far lost an estimated $29 billion worth of GDP to the pandemic, according to Uneca estimates.
Although the impact of Covid-19 on Africa is yet to reach the levels experienced in Europe, Asia and North America, the continent has so far lost an estimated $29 billion worth of GDP to the pandemic, according to Uneca estimates.
With the economic crisis unfolding as the
number of infections and mortality rises, Africa is appealing for a
speedy disbursement of the bailout package in the form of suspension of
debt service payments, budget support, extended credit facilities among
other measures.
Globally, the Covid-19 infections were more than 500,000 as at
the time of going to press on Friday, with over 24,000 deaths. African
infections were above 3,200, with more than 83 deaths reported.
In
East Africa, Uneca has cautioned the region to brace for disruptions in
intra-regional trade, supply chains with major trading partners
including China, commodity price shocks, battering of tourism and
aviation sectors, and massive job losses.
Economic growth is expected to drop from 6.4 per cent in 2019 to about 3.4 per cent this year.
To
help the continent combat the pandemic, the ministers want development
partners to immediately waive interest payments on debt amounting to $44
billion for 2020, with possible extension to the medium term.
The
waiver, which should include interest payments on public debt and
sovereign bonds, would provide countries with fiscal space and
liquidity.
In the case of the private sector, the
continent requests a waiver of interest payments on trade credits,
corporate bonds, lease payments and activation of liquidity lines for
central banks to ensure countries and businesses can continue to
purchase essential commodities without weakening the banking sector.
“This should be coupled with policies to keep businesses open in order to maintain jobs,” noted Dr Songwe.
In
addition to debt relief, the continent is also seeking intervention for
weak healthcare systems that could be overwhelmed in case of an
exponential rise in infections.
The ministers appealed
for healthcare funding, including the activation of the Global Fund,
grant funding and safety nets for the most vulnerable including women
and children, and ensuring the availability of testing material.
The
ministers are also calling for a waiver of remittance fees given the
expected slowdown of major economies that are the source of remittances
to Africa.
“A waiver on the remittances fees will help mitigate against the expected decline in amounts sent,” said Dr Songwe.
No comments:
Post a Comment