Countries across Africa still face financing needs amounting to over US$110 billion in 2020 alone, with US$44 billion yet to be financed, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa released on Monday 29, June 2020.The COVID-19 pandemic continues to represent an unprecedented health and economic crisis, with costs that will be felt most keenly by the poorest segments of the world’s population,
The international financial institutions have provided a much-needed assistance to sub-Saharan Africa and the Outlook described the types of international assistance the continent has received since the crisis. On March 25, the IMF and the World Bank called on the G20 nations to provide debt relief to the poorest countries. On March 26, the IMF modified the Catastrophe Containment and Relief Trust (CCRT) to provide immediate debt service relief for its poorest and most vulnerable members affected by the COVID-19 pandemic.
As of June 16, the IMF has approved debt service relief to 28 countries—of which 21 are in sub-Saharan Africa—for an initial phase of six months (ending October 13), which can be extended up to two years provided the CCRT has sufficient resources. On April 15, Initiative (DSSI), which allows the world’s poorest countries—most of them in Africa—to suspend up to US$14 billion of debt service payments due in the eight months from May to December 2020.
“Countries facing debt sustainability challenges should engage in proactive negotiations with both official and private sector creditors on restructuring their debt service payments. Sub-Saharan African countries should also explore all available options for international support” said Abebe Aemro Selassie, Director of the IMF’s African Department. The IMF has also doubled access to its emergency lending facilities. Access limits to the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) have been doubled temporarily, from 50 percent to 100 percent of the country’s IMF quota per year, allowing the IMF to meet the expected global financing demand of about US$100 billion.
As of mid-June, 29 sub-Saharan African countries have received IMF disbursements totaling about US$10.1 billion through these emergency facilities or augmentation of access under the existing program arrangements. Despite this, Abebe said more international support is urgently required for sub-Saharan Africa to overcome the crisis and return to sustainable growth.
By Zainab Iyamide Joaque