The latest African Economic Outlook report estimates that Africa’s gross domestic product (GDP) contracted 2.1% in 2020, the continent’s first recession in half a century.
The report launched under the theme, ‘From debt resolution to growth: the road ahead for Africa’ and it highlights the impact of COVID-19 on African governments debt and offers mitigating measures to governments and policymakers.
On the subject of the debt, the report estimates that African governments need surplus gross financing of about $154 billion in 2020/21 to respond to the COVID-19 crises.
In a virtual meeting preceding the launch of the report, Nobel laureate Joseph Stiglitz called for a comprehensive global plan to help countries cope with mounting debts that have been compounded by the COVID-19 pandemic and about the prevailing global debt architecture.
“That’s a question I’ve been very concerned with for a long time… You need debt restructuring and that needs to be really high on the international agenda. Every country has bankruptcy laws, but there’s not bankruptcy law for international debt. Remember, when there’s too much debt it’s as much the creditors’ problem as the debtor’s problem,” said Stiglitz.
He also deliberated on debt relief efforts, including a debt standstill that the G20 group of wealthy nations presented to the world’s poorest countries in April 2020.
Stiglitz said the standstill took place when it seemed the pandemic might last only a few months.
“Now that it’s lasted a year, a standstill is not enough. What needs to be done with debt is comprehensive and quick restructuring. We don’t want to fall into the trap of doing too little, too late,” said Stiglitz.
This year’s report highlights how the economic fallout of the COVID-10 pandemic has contributed to rising debt levels among African countries and proposes remedies.
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