President Ramaphosa calls for a two-year global debt standstill
AU chair Cyril Ramaphosa has urged the world's richest nations to agree to a two-year debt standstill to ease the impact of the pandemic on the African economy.
South African President and Chairperson of the African Union, Cyril Ramaphosa has called for a two-year standstill on all bilateral and multilateral debt.
Ramaphosa said that the African Union had engaged both the G20 summit leaders as well as the World Bank and International Monetary Fund on the subject.
Ramaphosa urges a united response to the pandemic
The South African head of state revealed this in his opening statements to a virtual conference with Heads of State and Government of countries neighbouring South Africa on responses to the global pandemic.
In addressing neighbouring heads of state Ramaphosa revealed they had requested a Special Drawing Rights Allocation to Africa.
An SDR allocation is a low-cost way of adding to IMF members’ international reserves, allowing them to reduce their reliance on more expensive domestic or external debt for building reserves.
“We have addressed the virtual Summit of the G20 and a virtual joint meeting of the World Bank and IMF, where we called for, among other measures, the allocation of more Special Drawing Rights Allocations to Africa to provide much-needed liquidity to central banks, the corporate sector and SMEs,” Ramaphosa said on Friday 8 May 2020.
“We argued for a waiver of all interest payments on multilateral and bilateral debt.
“This would provide the necessary fiscal space for African governments to devote all available resources to response and recovery.”
South African president calls for a two-year debt standstill
Ramaphosa said that the international community were positive about supporting global recovery, but the IMF and World Bank were currently only amenable to a nine-month debt standstill.
“In general, the response from the international community has been positive with various partners making pledges, offering debt relief measures and providing concrete support in the form of medical supplies.
“While the World Bank and the IMF have supported a debt standstill for nine months, we believe that – given the extent of the anticipated damage – we will need a debt standstill for two years.”
Last month the G20 agreed to a debt service standstill on bilateral loans for a group of 76 low-income countries. Private creditors were not asked to participate in this debt standstill.
The path of recovery and reconstruction
Ramaphosa urged heads of state to continue to cooperate as Africa navigates the global health crisis.
“I am certain that, working together, we will be able to better protect the health, the well-being and the lives of our people.
“We will be able not only to overcome this grave health emergency but also place our countries on a path of recovery and reconstruction.”
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