G20 must capitalise on the current momentum and step up for Africa’s economic recovery
New analysis from the ONE Campaign reveals that over $42 billion for Africa is at stake based on decisions global leaders make in the next three months. These vital funds could be lost if leaders refuse to extend the temporary debt service standstill until the end of 2021 and fail to back the general allocation of Special Drawing Rights (SDRs).
As global finance chiefs meet for this week’s World Bank-IMF Spring Meetings, the anti-poverty organisation is urging G20 countries not to waste this rare opportunity to move as quickly as possible to address the growing financing needs facing the continent, but also warns that even if these steps are taken, current progress is too slow and a greater sense of urgency is needed to limit the economic and human toll of COVID-19.
Against a decline in investment, remittances, a liquidity crisis and the $345 billion financing gap facing Africa, ONE is calling on the G20 to extend its Debt Service Suspension Initiative (DSSI) to the end of 2021 and to reiterate their support for allocating $650 billion in SDRs.
David McNair, ONE’s Global Policy Executive Director, said:
“One year into this crisis, we need to see an end to the glaring double standard where rich countries put trillions in liquidity support for their own economies while refusing to enable others to do the same. We won’t see a global economic recovery until all countries can withstand the shock of the pandemic and rebuild their economies.
“While some parts of the world are finally turning a corner, Africa’s recovery risks falling behind the curve. We need to move faster than the virus. This much-needed financing could help procure vaccinations in Africa, enable countries to prioritise the pandemic and ensure more people have access to food and quality education.
“That’s just the tip of the iceberg of the immense challenges facing the continent. G20 leaders must capitalise on the current momentum, put politics aside and support a robust economic response package for vulnerable countries.”
Note to editors:
- Read ONE’s latest policy brief – An economic response package to spur a truly global recovery
- The ONE Campaign has been calling for a $650 billion issuance of IMF Special Drawing Rights coupled with a redistribution mechanism to support countries in need. To see how redistribution could help the world’s poorest countries, check out our tool.
- The $42 billion is calculated as follows:
- Countries are allocated SDRs in relation to the size of their global economy, so a new $650 billion SDR allocation would mean approximately $33 billion for African countries.
- In 2020, 45 countries signed up for the Debt Service Suspension Initiative (DSSI), resulting in $5.7 billion in debt payments deferred. Currently, the initiative has been extended until June 2021, which will pause $6.8 billion in debt service payments from participating countries. Extending the standstill until the end of 2021 could potentially save an additional $9.9 billion. Eligible African countries’ share of suspended debt payments would total $9 billion in 2021.