PARIS: French President Emmanuel Macron will on Tuesday host a virtual summit of European and African leaders to seek solutions to the financial crisis in Africa, where governments hope to boost development while managing massive debts.
The “summit on financing African economies,” bringing together 30 heads of state and government via videoconference, was planned last year after the International Monetary Fund (IMF) calculated that African economies risk running into a total “financial gap” of $290 billion by 2023.
Economic growth on the continent, which experienced its first recession last year, is expected to rebound to 3.4 percent this year and 4 percent in 2022.
A moratorium on debt servicing, put in place in April 2020 by the G20 and Paris Club group of creditor nations, has given Africa a bit of breathing space, suspending the repayment of €5.7 billion ($6.9 billion) by 50 countries.
The G20 also convinced China, by far the biggest bilateral lender on the continent, and private creditors to take part in future debt negotiations. But this won’t be enough.
“We are collectively in the process of abandoning Africa to solutions that date from the 1960s,” Macron said last month, calling for a bold “New Deal” for Africa.
The French leader warned of the risks of failing to act, including reduced economic opportunities, increased migration and “the expansion of terrorism.”
The coronavirus disease (COVID-19) pandemic has exacerbated the problems on the continent.
The African leaders called for an “immediate moratorium” on the servicing of all external debts until the end of the pandemic, and the ring-fencing of development aid.
They also urged the IMF to issue African nations special drawing rights (SDRs) convertible to global currencies like the dollar, euro or yen, to provide them with “the liquidity essential for the purchase of basic products and essential medical equipment.”
Macron has also suggested that the IMF sell gold to fund interest-free loans to African countries.
The conditions proposed by the IMF in exchange for its support are still under discussion.
On Monday, Ivory Coast President Alassane Ouattara asked the IMF to grant African states hoping to benefit from its financing more leeway in their public deficits.
Oxfam has called on the IMF and the World Bank to end “unfair or regressive fiscal conditionalities in the context of their loans and programs.”