Africa: G20 Debt Relief for Poor Nations Means Covid Healthcare Investment

opinion

We face a twin-track world where rich countries recover from COVID-19 while the rest of the world sees ever-increasing disparity. Debt relief is one way forward

When COVID-19 first hit, it was spoken about as a 'great equaliser' - but as its full impact is becoming clearer, it is clear this could not be further from the truth, particularly when it comes to how nations are able to build back. Countries across the world, rich and poor, have all taken an economic hit over the last year. But the pandemic made existing inequalities worse, pushing as many as 150 million more people into extreme poverty according to the World Bank.

On one side, rich countries have been able to mobilise huge sums, an average of nearly 10% of their GDP, and an unprecedentedly large total of $20.6 trillion to respond to the pandemic and stimulate their economies.[1] Take the USA's announcement last month of $1.9 trillion in relief measures as an example.

The world's poorest countries, at the other end of the spectrum, have fewer options available to help weakened economies bounce back. Although many have had their debt repayments suspended for the moment, repayment still looms meaning that there is less room to invest in healthcare systems which were fragile even before the onset of COVID-19, and many are hesitant to re-impose restrictions and public health measures which could undermine the modest recovery of their economies, despite new waves of the disease.

Mass vaccination for most poorer countries is still a while off, and so we are facing the prospect of a twin-track world in which rich countries begin to recover while the rest of the world sees ever-increasing disparity in human development and basic survival.

Finance ministers from the world's wealthiest economies are coming together this week to discuss how they will build back after the pandemic. But it's vital that their approach supports the world's poorest countries and enables them to invest in frontline defences against health and climate threats.

But the good news is that the solution to this problem is well within our reach. Just $1.2 billion could ensure all healthcare facilities in the world's poorest countries access to clean water, handwashing facilities and decent toilets.

But many poor countries are paying multiples of this in debt service each year. Zambia, for example, paid over $2 billion in 2019, a staggering 11% of its Gross National Income and has since defaulted on its payments. Pakistan paid a huge $11 billion to service their debt in the same year - an amount which could pay for access to taps, toilets and handwashing facilities in hospitals across all of the least developed countries three times over. By committing to comprehensive debt relief and restructuring - the G20 leaders could transform this situation.

It would also be a hugely popular decision. A new global poll of over 18,000 adults across 15 countries including the UK, Italy, Brazil, Nigeria, India, Australia and the USA[2],commissioned by WaterAid and conducted by YouGov, reveals that 75% of those surveyed believe that debt payments by the poorest countries (including to private sector creditors) should be suspended so that countries can invest more of their scarce resources into essentials like water and soap to help fight Covid-19 and other diseases.

While debt service payments to governments are currently on hold, this suspension is due to end in June, even as the global pandemic continues. The International Monetary Fund is calling for an extension to that suspension on payments and for it to include debt to private sector lenders. But even that will do little more than delay payments for countries struggling with unpayable debt. True debt relief and restructuring, which the G20 could agree[3], would radically change the economic prospects of poorer nations. With the means to invest, those countries could then make smarter economic decisions to tackle the immediate crisis whilst also protecting against future pandemics.

The global pandemic has highlighted the inequalities and poor state of healthcare across the world - and must be the catalyst for change in this area. We know that water, sanitation and hygiene are the foundations for quality health care. Now it's up to the G20 leaders to seize their opportunity to do the right thing.

[1] Devex counts $20.6 trillion in pandemic-related funding announced by December 2020, the vast majority is from Governments - $12.2 trillion - and Multilaterals second largest at $7.7 trillion.

[2] Based on polling conducted by YouGov for WaterAid: 18,635 adults surveyed across 15 countries: Australia, Brazil, Canada, France, Germany, India, Italy, Japan, South Korea, Nigeria, Saudi Arabia, Sweden, South Africa, UK, USA. www.washmatters.wateraid.org/publications/public-support-wash-resilience.

[3] https://www.imf.org/en/About/FAQ/sovereign-debt#g20q1

Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Bernard Aryeetey is WaterAid's global international affairs director

More From: Thomson Reuters Foundation

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