(4 minutes)
· African and European leaders along with multilateral lenders and institutions, will meet in Paris tomorrow (Tuesday) to strategize for hammering solutions to financing Africa’s development needs
· The meeting assumes importance against the backdrop of IMF’s projection that Africa would face a financing gap of US$ 290 billion by 2023
· The growth expectations also are buoyant going by the projections. The continent experienced its first recession in half a century last year and the growth contracted by (-) 2.1%
· However, in all likelihood, growth is expected to rebound by 3.4% in 2021 and 4% in 2022
African and European leaders along with multilateral lenders and institutions, will meet in Paris tomorrow (Tuesday) to strategize for hammering solutions to financing Africa’s development needs.www.trendsnafrica.com carried a story a few days ago about the expectations from the Paris meeting, which the African countries would leverage to retire some of the their debts or at least carry forward them beyond the maturity period.
The Summit on Financing African Economies, which has evoked widespread international attention, is being hosted by French President Emmanuel Macron. The meeting assumes importance against the backdrop of the IMF’s projection that Africa would face a financing gap of US$ 290 billion by 2023. Many predict that the severity could be more depending on how long the pandemic would last and how well the citizens could be protected. Unlike in other parts of the geography, the number of infections and death toll in the continent is much lower.
The growth expectations also are buoyant going by the projections. The continent experienced its first recession in half a century last year and the growth contracted by (-) 2.1%. However, in all likelihood, growth is expected to rebound by 3.4% in 2021 and 4% in 2022.
A pause on public debt servicing introduced in April 2020 at the initiative of the Paris Club and the G20 after the stress caused by the pandemic has also provided some breathing space for developing countries, by suspending some Euro 5.7 billion in interest payments. It is significant to note that Africa’s largest bilateral creditor –China- has provided at least US$10.7 billion in global debt relief in 2020 and 2021. Many African countries are still knocking at the doors of Beijing for further relaxation.
Leaders like Macron have been urging the IMF to extend Special Drawing Rights (SDRs) to African countries to meet the essential liquidity to purchase basic commodities and essential medical equipment. In principle, the IMF has agreed to issue SDRs of US$650 billion. Of that, US$ $64 billion will be allocated to Africa, in principle. African countries feel that the amount is insufficient. French President Macron also endorsed that view.. The IMF also has to consider a proposal for selling gold to provide zero-interest loans to African countries.
