Harare – The United Nations and an increasing number of national leaders are pressing creditors to expand the Debt Service Suspension Initiative under which low-income countries have secured debt relief during the COVID-19 pandemic.
At a virtual meeting titled “Financing for Development in the Era of COVID-19 and Beyond” – convened by Prime Minister Justin Trudeau of Canada, Prime Minister Andrew Holness of Jamaica and UN Secretary-General António Guterres – leaders lent their weight to a lobby to extend debt relief.
Dr Guterres commended ongoing efforts to widen debt relief and improve access to Special Drawing Rights, but urged more.
“I’m calling for bolder and more ambitious measures. A new debt mechanism could provide a menu of options, including debt swaps, buybacks and cancellations,” he said. “This is also the moment to tackle longstanding weaknesses in debt architecture.”
PM Holness weighed in: “Debt servicing has come at tremendous socioeconomic costs to our populations, which have borne the burden of steep costs in public expenditures.”
African Development Bank Group president Dr Akinwumi Adesina said the continent’s economic recovery hinged on securing equitable access to vaccines and developing solutions for debt distress.
“Africa needs debt relief, debt restructuring and debt sustainability,” he said.
He also said any new allocation of IMF Special Rights should be restructured as any disbursement under the current system would give just 3.2 percent of the money to low-income countries.
He called for formation of an African financial stability mechanism to provide jointly guaranteed emergency support.
“The mechanism will provide a much-needed fiscal safety net for African economies and help to avoid regional spill-over effects of countries falling into illiquidity and insolvency.”