US$500bn to jumpstart African economies

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Harare - African finance ministers say at least US$500 will be required to jumpstart economies battered by the COVID-19 pandemic.

This came out during a recent virtual meeting of the ministers, which was convened by the United Nations Economic Commission for Africa in conjunction with the IMF.

The finance chiefs called on the IMF to avail US$500 billion in Special Drawing Rights from the institution, better market access, more concessional resources and an extension in the Debt Service Suspension Initiative (DSSI) given the prolonged nature of the pandemic.

Economic Commission for Africa executive secretary Ms Vera Songwe and IMF managing director Ms Kristalina Georgieva attended the meeting, whose main objective was to discuss immediate economic responses to COVID-19.

“We all know that the COVID-19 pandemic will persist for the next two to three years. Why are we extending the DSSI for six months and not 24 months?” asked Ghana’s Finance and Economic Planning Minister Ken Ofori-Atta.

He said the effects of the new coronavirus were “a frightening thing for a finance minister to witness when they don’t have the means to respond”.

On access to the markets, Egypt’s Minister of Finance Mohamed Maait said “there’s a strong case for vulnerable countries to access the markets at affordable rate to afford essentials such as PPEs and food for their populations”.

Equitable access to COVID-19 vaccines was highlighted as an imperative for building forward better.

“The world stands to lose an estimated US$9 trillion if only the rich get COVID-19 vaccines. Forty percent of this loss will be in advanced economies,” the IMF’s Ms Georgieva said.

Ms Songwe said countries needed additional fiscal space and less austerity; while the IMF boss called for “bold and immediate action for response, recovery, and reset of African economies.

“The objective of the meeting was to seek IMF support in forging a way out of the crisis by transforming existing liquidity instruments and easing market access to alleviate the debt burden and provide much needed liquidity for the continent,” Ms Songwe said.

Noting the finance ministers’ call for tripling of concessional financing, Ms Georgieva urged them to prepare for focused and practical discussions at the traditional Spring Meetings of the lending institution.

“Now is the moment to demonstrate that SDR allocation can be part of a comprehensive support framework, together with debt reduction, debt relief and policy support actions in the countries,” said Ms Georgieva.

Angola’s Finance Minister Vera of Angola emphasised the importance of country reforms and good governance as important components of any response and recovery plan.

The meeting agreed on the need for a concerted efforts to accelerate reforms to increase revenues, improve expenditure and manage debt to attract more private sector investments into Africa.

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