African Leaders Seek Debt SolutionsThe president of the Republic of France met yesterday in Paris with dozens of African leaders to discuss the relaunch of growth, betting on the involvement of international partners and the creation of a package of “massive support” to economies.
“The summit aims to deepen two lines of aid: the creation of a massive support package for the African continent to overcome the pandemic shock and, on the other hand, to lay the foundations for a new cycle of growth that will benefit the African peoples, but which can also be a growth engine for the entire world economy,” an Elysée source said at the launch of the summit.
The Summit on Financing African Economies, promoted by Emmanuel Macron, takes place a day after France announced debt forgiveness of more than 4 billion euros to Sudan, and follows the release of a request for support from African leaders on April 15, 2020, in the Financial Times and Jeune Afrique, affected not only by the impact of the pandemic on health, but also on the economy, which saw already existing weaknesses exacerbated by the restrictive measures needed to prevent the spread of the virus.
The initiative is attended by dozens of presidents of African nations, including the Lusophone countries of Angola and Mozambique, leaders of the International Monetary Fund (IMF), the African Development Bank, the World Trade Organization, the World Bank, the United Nations, the European Union, and the African Union, the Portuguese Prime Minister António Costa, and those of Spain and Italy, among others.
We are very afraid of the risk of divergence between the African economies, and the developed economies
Although the continent has recorded a relatively low number of deaths, about 130,000, the equivalent of deaths in the United Kingdom, for example, officials at the Elysée, the official residence of the President of the French Republic, stress mainly the effect on the economy and, consequently, on the lives of people, whose per capita income is not expected to return to pre-pandemic levels until 2023 or 2024.
“We are very afraid of the risk of divergence between the African economies, and the developed economies,” said one of the officials, in line with the IMF executive director, when he said he feared that one of the consequences of the pandemic, in addition to the “great confinement”, would be “a great divergence” between Africa and the rest of the world in terms of relaunching economic growth.
The continent has already received large sums of money to fight the pandemic and revive growth, but the financing needs are significantly greater than the aid received.
“The IMF estimates that African countries have financing needs equivalent to 450 billion dollars by 2025, hence the idea of massively increasing emergency aid to Africa,” which has suffered the same as other countries, but does not have the financial instruments that the most developed countries have made available to their economies.
The IMF will issue $650 billion in Special Drawing Rights (SDRs), which will then be distributed among members according to quotas
The European Central Bank, for example, has provided 750 billion euros in stimulus to the region’s economy, while the United States has approved an aid package worth 2 trillion dollars, the largest ever, which contrasts with the weak financial capacity of African countries.
The IMF will issue $650 billion, in Special Drawing Rights (SDRs), which will then be distributed among members on a quota basis, giving $34 billion for Africa, of which $23 billion is earmarked for sub-Saharan Africa.
