African economies could swing into a depression without a debt moratorium of at least three years, Ghana’s Minister of Finance Ken Ofori-Atta said.
“If we don’t intervene in Africa and manage a way for pushing this debt servicing out for at least three years, are we going to move into a depression and then make the tail of recovery a lot longer than it should be?” Ofori-Atta said on Wednesday during a virtual conference organised by the Harvard University Centre for African Studies.
Countries in the region need the debt standstill to free up funds to revitalise economies battered by the coronavirus pandemic, Ofori-Atta said. The idea of Africa servicing “$44 billion of loans within one year is just not possible,” he said.
Ofori-Atta has led a group of African finance ministers supporting a debt-relief proposal engineered by the United Nations Economic Commission for Africa (Uneca).
Uneca and the finance chiefs initially said the continent will need a stimulus package of $100 billion – including $44 billion in debt-servicing waivers – to face the virus.
However, South African President Cyril Ramaphosa, who chairs the African Union, said last week the continent needs more than $200 billion in support.
The Group of 20 leading economies in April agreed to grant a debt waiver of about $20 billion until the end of the year. The International Monetary Fund and some G20 members have supported an AU idea to extend the waiver to two years.
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