The International Monetary Fund has approved a $500 million package to give six months of debt relief to developing nations struggling with the coronavirus pandemic. While the move is being welcomed, some finance experts say the world's wealthiest nations can do more — especially for the African nations on the list.
The IMF’s plan — which affects 19 African countries will allow vulnerable nations “to channel more of their scarce financial resources towards vital emergency medical and other relief efforts,” the organization said in a statement.
Eric LeCompte, executive director of the Jubilee USA Network, a coalition of religious organizations that works for international finance system reform, says the plan will provide much-needed relief to countries like the Central African Republic, Chad, the Democratic Republic of Congo, Liberia, Malawi, Mali, Niger and Rwanda.
He spoke to VOA from Washington, via WhatsApp.
“When we're dealing with the reality that on average, countries across sub-Saharan Africa have an average of 50 critical care units, we know that they're not going to be able to deal with minor elements of the crisis, let alone more significant ones," he said. "In part, that's why we saw all the finance ministers across Africa, almost three weeks ago now, step up and say we need to be able to stop paying debts for all African countries, making a call to stop and suspend debt payments for $44 billion because they knew that was money that could be quickly invested, moved very quickly into economies to be able to get the ventilators, to be able to increase health systems so that they might be able to combat the virus.”
So is the IMF’s relief package enough?
South African economist Iraj Abedian, who heads Pan-African Investment and Research Services, said the relief package is “more symbolic than substantive.”
And, Abedian said, this plan doesn’t improve Africa’s ability to help itself. The continent’s more developed economies — like Kenya, South Africa and Nigeria — are not included in the package.
The continent needs its developed economies right now, he said. And recent moves in the financial market — like the recent downgrading of South Africa’s credit rating to “junk” status — don’t help.
“So to the extent that at this very wrong moment, South Africa has been downgraded, it reduces its access to global capital markets, it raises the cost of borrowing, and as such, it makes it so much less able to accelerate its capacity to help its own nation, but also in the neighborhood,” he said.
And, LeCompte said, wealthy nations can also do more. He singled out one in particular.
“I think one of the challenges we're dealing with right now, with the G20 in terms of the initial step, which is suspending debt payments, is in particular China has been resistant in the discussions so far. ... China in particular, because right now China controls 25 percent of all lending, 25 percent of all debt in Africa, it doesn’t want to change the price tag of that debt,” he said.
The African region still has the world’s lowest confirmed coronavirus caseload, according to the World Health Organization. But African experts are quick to note gaps in testing and health infrastructure, meaning that even in developed nations like South Africa, there are likely many, many more cases than doctors know about.