South African President Cyril Ramaphosa said on Friday that African countries needed a two-year debt standstill due to the impact of the COVID-19 pandemic, longer than a moratorium agreed by G20 governments last month.
The World Bank and International Monetary Fund-backed initiative to suspend bilateral debt service for some of the world’s poorest countries is expected to free up billions of dollars to fight COVID-19.
The World Bank and IMF have said that official creditors have mobilised up to $57 billion in emergency support this year for Africa. But the disease is exposing cracks in its under-equipped health systems, and they believe the continent still faces a funding gap of around $44 billion and will need more support next year.
“While the World Bank and the IMF have supported a debt standstill for 9 months, we believe that…we will need a debt standstill for two years,” Ramaphosa, who currently chairs the African Union, told a conference call with heads of state from neighbouring countries.
He said he had called for the allocation of more IMF special drawing rights to help central banks, the corporate sector and small and medium-sized businesses navigate the massive economic shock from COVID-19.
Charity groups and the United Nations Conference on Trade and Development have argued for a cancellation – not just a debt standstill – of poor countries’ debts, saying that defaults by developing nations are inevitable.