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The Summit for a “New Global Financial Deal” is being held in Paris, France (22 – 23 June). The objective of the event is to help developing countries finance the fight against climate change while continuing efforts to reduce poverty. French President Emmanuel Macron, the host of the meeting, anticipates addressing issues ranging from the reform of multilateral development banks and the fight against over-indebtedness to the financing of green infrastructure and the mobilization of finance for vulnerable countries to climate change.
The Summit for a “New Global Financial Deal” is being held in Paris, France (22 – 23 June). The objective of the event is to help developing countries finance the fight against climate change while continuing efforts to reduce poverty. French President Emmanuel Macron, the host of the meeting, anticipates addressing issues ranging from the reform of multilateral development banks and the fight against over-indebtedness to the financing of green infrastructure and the mobilization of finance for vulnerable countries to climate change.
Prominent world leaders were invited, including Moussa Faki Mahamat, Chair of the African Union Commission, his counterpart Ursula von der Leyen of the European Union Commission, and others. In the run-up to this international summit, economist Carlos Lopes explains what is at stake for Africa at a time of climate change and the burden of debt.
At COP27 in Egypt, French President Emmanuel Macron announced the Summit for a “New Global Financial Deal”, which is finally being held now. The event aims to restore fiscal space to countries facing difficult short-term situations, particularly for the most indebted countries.
In the run-up to this international summit, economist Carlos Lopes explains what is at stake for Africa at a time of climate change and the burden of debt. He stated that 2023 will see major changes in the international financial architecture, as geopolitics and the climate emergency are at the centre of paradigm shifts. There has never been so much talk at decision-making levels about the need for reform.
Since the beginning of the Covid-19 era, two African countries, Ghana and Zambia, have defaulted on their debts. This demonstrates the fragility of certain African economies, which had a stock of debts of 790 billion dollars in 2021 in sub-Saharan Africa. And these countries are still taking on debt. Can Africa break out of this vicious circle? Before Covid-19, Ghana had one of the highest growth rates in the world. And now it can’t even roll over its debt, as countries with strong currencies do without difficulty, because they suck in savings from countries considered to be at risk in times of crisis.
Public debt is not just an African problem, this is a global problem in which Africa as a whole plays a very small role – a debt as big as that of Belgium and the Netherlands combined. Africa has some of the lowest debt-to-GDP ratios in the world, certainly much lower than those of members of the Organisation for Economic Co-operation and Development (OECD), and some of the highest growth rates in the world, exceeded in regional terms only by India and South-East Asia. Africa’s difficulty is the chronic lack of access to loans at rates equivalent to or close to other regions.
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The Paris Summit will be attended by several African leaders, including Gabon’s Ali Bongo Odimba, Mozambique’s Filipe Nyusi, Mauritania’s Mohamed Ould El-Ghazaouani, and Comoros’ Azali Assoumani. By speaking with one voice, can African countries make themselves heard more effectively on the issues of debt and climate financing? Without prior consultations, it is difficult to envisage common positions. Yet the African finance ministers, with the help of the ECA, have presented a list of 17 measures to reform the international financial architecture and deal with the urgent issues of countries’ public debt. Hope that African leaders are pursuing a consistent strategy.
