Four African finance ministers urged the Group of 20 nations to pressure the International Monetary Fund to accelerate the disbursement of new loans the continent needs to overcome the economic devastation wrought by the coronavirus pandemic and avert an insolvency crisis.
“Timely, stable and sufficient long-term financing on fair terms for an inclusive and sustainable post-Covid recovery remains out of reach for many developing countries,” Nigerian Finance Minister Zainab Ahmed and her counterparts Ken Ofori-Atta of Ghana, Nicolas Kazadi of the Democratic Republic of Congo and Adama Coulibaly from Ivory Coast wrote in an op-ed published by Italy’s la Stampa newspaper on Friday.
Their call comes before a meeting of G-20 finance ministers and central bank governors in Venice this weekend.
The IMF’s board last month unanimously supported a proposal to create a record $650 billion of new reserves, known as special drawing rights, or SDRs, for its members, but only $33 billion of that has been earmarked for Africa.
The plan still requires final approval by the Washington-based lender’s board of governors, which is comprised of representatives from its 190 member countries — typically their finance ministers or central bank governors.
“The urgency now is to accelerate the disbursement of these SDRs to forestall the current emerging market liquidity crisis devolving into an insolvency crisis,” the African finance chiefs said, calling on the IMF to outline how the rights will be dispensed and set reallocation and on-lending terms.
They also want the lender to replenish its Poverty Reduction and Growth Trust, which provides support to low-income countries through interest-free loans, and other funding facilities.
France has committed to reallocating part of its SDRs to Africa. Leaders of the Group of 7 biggest economies last month discussed supporting plans for a $100 billion reallocation.
South African President Cyril Ramaphosa has previously said about a quarter of the total allocation, equivalent to around $162 billion, should be made available to African countries and called on rich nations to donate — and not just on-lend — their allotments. South Africa is the only African member of the G-20, which comprises the European Union and 19 other major economies.
Ahmed, Ofori-Atta, Kazadi and Coulibaly also urged the G-20 to consider on-lending at least $30 billion in SDRs to a new facility that would catalyse investments to Africa, reduce the liquidity premiums on middle-income countries’ sovereign bonds and offer incentives for environmentally sustainable investments.
The facility would be similar to the European Stability Mechanism and help African nations address debt vulnerability and investment gaps, as well as threats posed by climate change, they said.
Rich nations should also accelerate the delivery of Covid-19 vaccines to the continent, according to the ministers.
“As the developed world is steadily reaching its vaccination goals, Africa braces for a third Covid-19 wave, as short-term vaccine supplies dry up leaving many countries unable to even follow up with second doses for high-risk groups,” they said.
Africa has taken delivery of just 66 million vaccine doses so far and less than 2% of the its population of more than 1.3 billion people has been fully inoculated, according to the World Health Organisation. The 50 million doses administered on the continent to date account for just 1.6% of those administered globally.
Support for manufacturing vaccines in low-income countries and recognition that voluntarily licensing agreements can make a positive impact on global supplies is encouraging, the ministers said.