Senegalese President Calls for Debt Relief Extension
Senegalese President Macky Sall implored G20 nations to extend Africa’s debt moratorium through 2021 as the continent battles the spread of COVID-19. Sall made his plea during a recent visit to the French Entrepreneurs Conference (REF) in Paris, where he referred to the pandemic as an “exceptional situation” that calls for “exceptional measures.”
Due to financial hardships incurred during the pandemic, the G20 group — composed of the world’s wealthiest nations, including China, Africa’s largest debt holder — agreed in April to suspend until the end of 2020 debt payments owed by 73 low-income countries, 37 of which are in Africa.
“For the most part, and for all African countries, internal efforts will not be enough to lessen the shock of [COVID-19] and revive economic growth,” Sall said. “We need more financial capacity, which is why, with other colleagues, I have made a plea for substantial relief of Africa’s public debt and private debt on terms to be agreed upon.”
“With an amount of $365 billion, the African debt represents only 2% of the volume of global debt,” he added.
Much of the African debt is attached to China’s Belt and Road Initiative (BRI), which is controversial due to the lack of transparency of the loans.
COVID-19 lockdown measures in Senegal have severely hampered its tourism, transport, fishing and poultry industries. It also has strained its vulnerable health system.
Tanzanian President John Magufuli and Kenyan President Uhuru Kenyatta recently echoed Sall’s plea to extend the G20 debt relief package. African officials have allies in leaders of the World Bank and International Monetary Fund who also called for extending the suspension through 2021. A vote on the measure is expected later this fall.
Oxfam, a group that works to end global poverty, is one of several charitable organizations that pushed for the G20 debt relief program to be extended even longer — through 2022 — to avoid “a catastrophe for hundreds of millions of people,” the group said in a news release.
A separate debt relief package for more than 25 African countries was approved in late July by the G20, World Bank, the International Monetary Fund, the African Development Bank and all Paris Club creditors. The package would offer more than $20 billion for governments to bolster health services.
Senegal is one of only four African countries that requested such assistance, according to a Quartz Africa report. The others are Cameroon, Côte d’Ivoire and Ethiopia. Other countries have refused to apply over fears of being punished by existing creditors, such as China, prospective investors and credit rating agencies.
China has announced debt relief from interest-free loans, but not from high-risk loans or huge loans related to BRI. According to the website The Diplomat, interest-free loans make up less than 5% of China’s total lending.