Private Creditors Reject Global Debt Relief for African Countries | Business and Economy


A group of private creditors hold the debt of African countries whose finances are collapsing under pressure from the coronavirus.

Ignoring calls for comprehensive debt relief from African countries, 25 private creditors with more than $ 9 trillion in assets under management joined together to influence debt restructuring efforts across the continent for countries whose finances have been severely strained by the coronavirus pandemic.

The Africa Private Creditors Working Group (AfricaPCWG) aims to “provide African governments, the ECA, the G20, the IMF and other Multilateral Development Banks (” MDBs “) with a forum through which all parties stakeholders can engage in a transparent and constructive manner ”with private creditors who hold debts issued by African governments and companies, according to a statement released by the group on Friday.

African governments are fighting to manage the effects of the coronavirus, which the World Health Organization has estimated could infect 29 to 44 million people on the continent in the first year if left unchecked.

African countries are also facing a combined debt service bill of $ 44 billion this year alone.

While the task force has expressed its readiness to support multilateral and bilateral efforts to help “some of the world’s poorest countries contain the economic impact of COVID-19”, its main core commitment “is the conviction that one size fits all “a one-size-fits-all solution will be counterproductive for the nations and peoples of Africa”.

The statement runs counter to calls from the G20 urging private creditors to align with their proposal to allow poorer countries to suspend debt payments for the remainder of the year.

Private creditors must accept that they cannot make big profits by lending to poor countries, said Tim Jones, policy manager at Jubilee Debt Campaign, a UK-based charity that works to end poverty .

“Unless debt payments to private lenders are canceled, IMF loans and the G20 debt suspension will be used to pay high interest to private lenders, an outrageous use of public money,” he said. he declared.

The G20 announced on April 15 an agreement with the Paris Club group of major creditor countries to freeze the debt payments of the 77 poorest countries from May 1 to the end of the year, as requested, in order to free cash for the pandemic.

But the Institute of International Finance (IIF) trade association, which previously called for the private sector to join the initiative, reported creditors’ concerns earlier this month. to the IMF, the World Bank and the Paris Club regarding their involvement in such an initiative. .

“A rushed and comprehensive approach developed in times of crisis will jeopardize this crucial long-term access to capital,” said the AfricaPCWG.

Farallon Capital Europe, Aberdeen Asset Management, Amia Capital, Greylock Capital Management and Pharo Management were among the members of AfricaPCWG.

He declined to name the other members.

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