With African nations facing a combined $44bn debt-servicing bill this year alone and buckling under the strain of the COVID 19 pandemic on their economies, private creditor group has rejected calls to provide debt relief to their debtors.
Rather, the 25 private creditors under the aegis of Africa Private Creditor Working Group (AfricaPCWG) with more than $9 trillion in assets under management have banded together to influence debt restructuring efforts throughout the continent for countries whose finances have been sorely pressured by the coronavirus pandemic.
‘A rushed, blanket approach developed during a time of crisis will put that crucial long-term access to capital at risk. We stand ready to provide support to multilateral and bilateral efforts to help some of the world’s poorest countries to contain the economic impact of COVID-19, our uppermost core engagement principle is the belief that a one-size-fits-all solution will be counter-productive for the nations and people of Africa’ the group stated.
This statement runs counter to calls by the G20 urging private creditors to match their proposal to allow the poorest nations to suspend debt payments for the rest of the year.
According to Tim Jones, Head, Policy at Jubilee Debt Campaign, a UK-based charity working to end poverty, it is time the private creditors realize that they cannot make huge profits from lending to poor African countries.
“Private creditors needed to accept they cannot make large profits from lending to poor countries. Unless debt payments to private lenders are cancelled, IMF loans and the G20’s debt suspension will be used to pay high interest to private lenders, outrageous use of public money,” he said.
Similarly, Eric LeCompte, Executive Director, Jubilee USA Network, an independent charity with affiliations to Jubilee Debt Campaign urged for transparency and above board creditor coordination which can be positive
“Transparent, above board, creditor coordination can be a positive move. However, some creditors just want to form a block to force more loans and keep their payments coming, instead of agreeing to real debt relief so all parties can get through a crisis” he said.
Recall that the G20 had announced an agreement with the Paris Club group of major creditor nations on April 15, 2020, to freeze debt payments for the 77 poorest countries from May 1 to the end of the year, as requested, to free cash for the pandemic.
The World Health Organization has warned COVID-19, the respiratory disease caused by the new coronavirus could infect between 29 million and 44 million people in Africa this year if it’s not contained, meaning already weak healthcare systems could be overwhelmed.
