Mozambique, Sao Tome and Principe, Somalia and Sudan are in debt distress while 11 other African countries are at high risk of debt distress as the coronavirus pandemic continues to wreak havoc across the continent, says the Economic Commission African (ECA).
Bartholomew Armah, Officer in Charge of the Macroeconomics and Governance Division at the ECA, said this Friday at the 39th Meeting of Committee of Experts of the Conference of African Ministers of Finance, Planning and Economic Development.
Speaking under the sub-theme: ‘Implementation of the Istanbul Programme of Action for the Least Developed Countries’, Armah said seven of the 11 countries at high risk of debt distress have requested for debt relief through the Debt Service Suspension Initiative (DSSI) which the ECA is advocating be extended to 2022 to allow more nations to benefit.
He said additional resources were needed to ensure the smooth transition of these countries from Least Developed Countries (LDC) status to developing countries.
The COVID-19 pandemic posed a challenge for future graduation of least developed countries, 33 of them African, to developing countries.
Failing to graduate means loss of privileges like Official Development Assistance (ODA) and trade privileges, “therefore it is imperative to assist these countries to move from their LDC status.”
In addition to the gradual phasing out of international support measures, ODA, trade-related and other measures, countries that are in the process of graduating or have recently graduated from LDC status were faced with the additional challenge of financing their recovery from the pandemic, Armah said.
“Per the outcome document of the Africa Regional Review, held virtually on February 22-26 in Malawi, it is imperative to assist LDCs to access concessional financing to address their structural challenges, smooth their transition and strengthen their response to the crisis,” Armah said.
He said without additional concessionary financing, the pandemic will undermine prospects for LDC graduation of Sao Tome and Principe, in particular.
Armah shared with the experts some of the measures being pushed by the ECA to support African recovery from COVID-19. These include the extension of the DSSI to 2022 and the issuance of Special Drawing Rights (SDRs) 500 billion. This will provide SDR 8.1billion (US$12.5bn) to African LDCs based on the quota system, giving them fiscal space to adequately respond to the pandemic and kick-start recovery.