(4 minutes read)
· African heads of states are now looking towards the World Bank and the IMF to bail them out from the distress situation that they are in
· Estimates put that the continent needs US$285 billion by 2025 to get over the resource crunch
· Going by the quota system that is followed by the IMF for distribution of SDRs, it is estimated that the share of Africa would be as low as low as US$ 33 billion
· But the leaders assert that they would need a minimum of US$ 100 billion to begin with.
African heads of states are now looking towards the World Bank and the IMF to bail them out from the distress situation that they are in. Estimates put that the continent needs US$285 billion by 2025 to get over the resource crunch. The recently concluded Paris Club meeting hosted by French President Macron assumes importance in this regard. One of the suggestions that cropped up during the meeting attended by a good number of heads of states from Africa suggested the IMF coming out with special drawing rights to bail out the African economies caught in the pandemic grip.
Among the avenues discussed at the recently concluded Paris summit on financing the continent’s economies was the special drawing rights (SDRs) initiated by the International Monetary Fund (IMF) some 52 years ago. SDRs are an artificial currency instrument created by the International Monetary Fund used for internal accounting purposes. The value (of SDRs) is calculated from a weighted basket of major currencies, including the U.S. dollar, the Euro, Japanese yen, Chinese Yuan, and British Pound.
Will that help Africa to come out of the woods? Analysts say that it may not meet the expectations of African heads of States. Going by the quota system that is followed by the IMF for distribution of SDRs, it is estimated that the share of Africa would be as low as US$ 33 billion. But the leaders assert that they would need a minimum of US$ 100 billion to begin with.
Obviously, African heads of state are not enthused by the limited SDRs rights that may be made available by the IMF. French President Macron, while articulating the collective views of the heads of state at the Paris Club, has called for more liberal approach from the member countries of the IMF to address the African financial tangle. He wanted the financial support to be considerably hiked, no matter what would be the fate of his clarion call.
In the beginning of the pandemic some time during April-May last year, during the UN General Assembly, African heads of states had pitched for US$500 billion for making good the impact of the Covid-19 pandemic and retiring their external debts from the developed world. It is not known how much they could garner. There are people who believe that such exhortations to the developed world could evoke only token goodwill gestures. To tide over the crisis, Africans themselves would have to find out their own ways.
