Finance ministers in Africa have said Africa needs an immediate emergency economic stimulus to the tune of $100 billion to deal with the devastating impact of the COVID-19.
A press statement by Economic Commission for Africa (ECA) states in Addis Ababa on Monday revealed that African Finance Ministers met on 19 March in a virtual conference to exchange ideas on the efforts of their respective governments in dealing with the social and economic impact of COVID-19.
During their meeting, the Ministers emphasised that without coordinated efforts, the COVID-19 pandemic will have major and adverse implications on African economies.
The press statement states that the original economic forecasts in most economies are on average, being downgraded by 2 to 3 percentage points for 2020 due to the pandemic.
“Africa needs an immediate emergency economic stimulus to the tune of $100 billion. As such, the waiver of all interest payments, estimated at $44 billion for 2020, and the possible extension of the waiver to the medium-term would provide immediate fiscal space and liquidity to the governments, in their efforts to respond to the COVID-19 pandemic,” they said.
The ministers added: “The interest payments waiver should include not only interest payments on public debt but also on sovereign bonds. For fragile states, the ministers agreed on the need to consider waiving principal and interest and encourage the use of existing facilities in the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions.”
In addition, the ministers underscored the need to support the private sector and protect the over 30 million jobs at risk, particularly in the tourism and airline sectors across the continent. Other critical sectors include agriculture, imports and exports, pharmaceuticals and banking.
African finance ministers agreed that all interest and principal payments on corporate debt, leases, extended credit facilities, refinancing schemes and guarantee facilities should be used to waive, restructure and provide additional liquidity in 2020.
They also stated that a liquidity line should also be made available to the private sector to ensure the continuity of essential purchases and all SMEs that are dependent on trade can continue to function.
But these measures, the ECA statement said, must accompany a policy of opening borders for trade. In this regard, the ministers noted that Europe and the United States, in particular, can build this as part of their stimulus to their private and financial systems.