African Finance Ministers, after a meeting on the economic impacts of COVID-19, are seeking economic stimulus package worth $100bn even as they urged creditors to waive $44bn interests on debts in 2020. During the virtual meeting held on 19th march 2020 but which the outcomes were released yesterday, the ministers were quoted in a statement by the Economic Commission for Africa (ECA) that: “Africa needs an immediate emergency economic stimulus to the tune of US$100 billion. As such, the waiver of all interest payments, estimated at US$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.”
The ministers agreed that these measures must accompany a policy of opening borders for trade even as they agreed that Europe and the United States, in particular, can build this in as part of their stimulus to their private and financial systems.
They further stated: “The Ministers emphasized that without coordinated efforts, the COVID-19 pandemic will have major and adverse implications on African economies and the society at large. Original economic forecasts in most economies are on average, being downgraded by 2-3 percentage points for 2020 due to the pandemic.
“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”, they added.
In other critical sectors including agriculture, imports and exports, pharmaceuticals and in banking, the 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.
It said 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.