Africa receives IMF aid to fight COVID19

African finance ministers met yesterday to discuss debt-relief proposals, according to a top United Nations official.

“As we move forward and as we talk about the debt service we’re going to need to talk about governance on the other side, and transparency in terms of how we then use the proceeds from the debt-service standstill,” UN Economic Commission for Africa Executive Secretary Vera Songwe said in an interview on Bloomberg TV.

African countries are discussing a special-purpose vehicle to exchange their sovereign debt for new concessional paper to avoid using funds needed to battle the fast-moving coronavirus to pay private creditors. The mechanism would be underwritten by a triple-A-rated multilateral lender or central bank, and used to convert commercial debt into longer-maturity paper, Songwe said last month.

Key Developments:

  • Gabon is seeking debt relief from its creditors. Finance Minister Jean-Marie Ogandaga said he’s in talks with all the country’s multilateral creditors and has written to the government’s Chinese partners and Afreximbank.
  • Nigerian President Muhammadu Buhari had a call with the prime minister of Pakistan about debt relief.
  • Spain called on private creditors to waive debt payments from African countries to open up fiscal space needed to battle the coronavirus pandemic, Spanish Foreign Minister Arancha Gonzalez said.
  • Measures by some African countries to get money flowing into the real economy aren’t working yet, with banks parking cash in government bonds as the economic slowdown cuts demand for credit.
  • The International Monetary Fund approved $1.23 billion of emergency funding for Kenya and Uganda, saying the coronavirus pandemic is likely to exact a severe toll on the two East African economies. The loans mean the IMF has disbursed more than $10 billion to African nations to help them combat the virus.
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