President Cyril Ramaphosa. Picture: Siyabulela Duda
President Cyril Ramaphosa. Picture: Siyabulela Duda

President Cyril Ramaphosa said on Friday that African countries needed a two-year debt standstill due to the effect of the Covid-19 pandemic, longer than a moratorium agreed on by Group of 20 governments last month.

The World Bank and International Monetary Fund (IMF)-backed initiative to suspend bilateral debt service for some of the world's poorest countries is expected to free up billions of dollars to fight Covid-19.

The World Bank and IMF have said that official creditors have mobilised up to $57bn (about R1.09-trillion) in emergency support in 2020 for Africa.

But the disease is exposing cracks in its underequipped health systems, and they believe the continent still faces a funding gap of about $44bn and will need more support in 2021.

“While the World Bank and the IMF have supported a debt standstill for nine months, we believe that ... we will need a debt standstill for two years,” Ramaphosa, who currently chairs the African Union, told a conference call with heads of state from neighbouring countries.

He said he had called for the allocation of more IMF special drawing rights to help central banks, the corporate sector and small and medium-sized businesses navigate the huge economic shock from Covid-19.

Charity groups and the UN Conference on Trade and Development (Unctad) have argued for a cancellation — not just a debt standstill — of poor countries' debts, saying that defaults by developing nations are inevitable.

Reuters

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