- They said that Africa is home to two-thirds of the world’s extremely poor
- IMF created $650 billion in SDRs last year to support global pandemic recovery
Wealthy countries should direct more of their emergency currency funds to help African countries battle rising global economic uncertainties.
In a statement titled: “Financing Crisis Recovery with Hope for the most Vulnerable in Africa"a consortium of African Catholic bishops said the continent is facing extreme hunger and debt crisis which needs urgent attention.
The Symposium of Episcopal Conferences of Africa and Madagascar (SECAM) was addressing global financial leaders attending the ongoing World Bank and IMF Spring Meetings in Washington DC.
"We call on G20 Finance Ministers and other world leaders to put in place viable plans for Africa to emerge from the Covid-19 crisis and the global supply chain disruption,'' SECAM chairperson Sithembele Siphuka said.
They said that Africa is home to two-thirds of the world’s extremely poor and the pandemic pushed 40 million more Africans into extreme poverty, lacking access to basic goods and services like health, education, food, and water.
''The Ukraine war impacts on food and energy prices will add to their hardship,'' the statement read in part.
They called for changes in the financial system that will benefit the most vulnerable, saying that although IMF created $650 billion in SDRs last year to support global pandemic recovery, little came to the continent.
“We welcome these resources which are fast, without conditions and add little or no debt, but are concerned that out of this amount, only $33 billion went to African countries,” the bishops said.
The G20 committed to a target of $100 billion in wealthy countries’ SDR contributions to fund developing countries.
Last week, the IMF board approved a new fund that could use up to $45 billion in SDR contributions to provide developing country low-cost loans.
They also lamented the debt crisis in the continent, saying loans as a proportion of the economy in Africa rose from 60 to 70 percent in the first year of the pandemic.
“African countries did not have means to mobilise sufficient resources for responding to the pandemic, and had to make impossible choices between saving lives and jobs, or paying creditors,” the prelates stated.
They called on world leaders to coordinate efforts to bring together public and private creditors to create mechanisms to reduce the unbearable debt burdens many countries in the region continue to face.
The increase in borrowing costs is likely to get steeper still as the Fed’s efforts to combat inflation at home lead to higher interest rates on US Treasuries, the benchmark for many developing economies.
Central banks across much of the emerging world are raising their own policy rates too, as prices surge.
Bishops fear that the double tragedy of Covid-19 and the ongoing economic crisis that has seen fuel prices rise on supply chain disruption, currency devaluation and war tension could push up interests.
They have requested the global lenders to institute debt suspensions and forgiveness.
''At least 60 per cent of debt in Africa is denominated in US dollars hence higher obligation as local currencies depreciate,'' they said.