Africa needs an immediate emergency economic stimulus of $100 billion to combat the impact of the coronavirus pandemic and almost half of that could come from waiving interest payments for countries on the continent, according to the United Nations Economic Commission for Africa.
The waiver of interest payments, estimated at $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 ECA said Monday in a statement after the continent’s finance ministers had a virtual meeting on March 19. The waiver should include not only interest payments on public debt, but also on sovereign bonds, it said.
Government debt as a percentage of gross domestic product 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. External debt payments consumed an average 13% of African governments’ revenue before the outbreak, data compiled by the U.K.-based Jubilee Debt Campaign showed.
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, African Development Bank and other regional institutions. 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.
“Without coordinated efforts, the Covid-19 pandemic will have major and adverse implications on African economies and the society at large,” the ECA said.