Experts want debt repayment suspension extended to end of 2021

NAIROBI, KENYA: African governments are rooting for the extension of the Debt Service Suspension Initiative (DSSI) until at least the end of 2021.

The move will free up an additional Sh871.6 billion ($8 billion) for recovery in 2021 and providing much-needed liquidity to respond to the Covid-19 crisis.

The meeting of the committee of experts of the Conference of African Ministers ended Friday ahead of the African Finance Ministers Meeting on Monday and agreed on a number of issues, among them the need for the Economic Commission for Africa (ECA) to support advocacy by member States for the extension of DSSI until at least the end of 2021.

The DSSI is helping countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people. Since it took effect on May 1, 2020, the initiative has delivered about Sh544.7b ($5 billion) in relief to more than 40 eligible countries.

In January, a club of rich countries (Paris Club) agreed to Kenya’s request for debt relief which will see the country save will save Sh17.1 billion.

The informal group of official creditors agreed to offer Kenya debt relief following the country’s application under the Debt Service Suspension Initiative (DSSI), which is run under the auspices of the G20, a group of 20 wealthy nations.

Noting that Kenya was eligible to benefit from the G20’s DSSI, the Paris Club agreed to freeze Kenya’s debt repayment from January to the end of June.

Some of the club’s members that participated in the DSSI include France, Germany, Canada, Denmark, South Korea, Spain, Italy, Belgium, Japan and the United States.

Kenya will save the most amount of money from Italy, which it was supposed to repay Sh4.5 billion during the six-month period, followed by Japan at Sh4.4 billion.

The suspension

The other member of the club that was supposed to get the third-highest payout from Kenya is France, which was to receive Sh3.9 billion from the country’s coffers. Germany was to get Sh1.82 billion and Belgium Sh1 billion.

The committee of experts of the Conference of African Ministers were concerned by the adverse socioeconomic and health impacts of the pandemic on African economies, coupled with their limited fiscal and monetary tools to respond to the crisis, which they said would most likely derail efforts to build forward better and to achieve the 2030 Agenda for Sustainable Development and Africa’s Agenda 2063. 

On COVID-19, the experts commended various initiatives undertaken by ECA to support Member States in leveraging the adoption of the African Union Commission and Africa Centres for Disease Control and Prevention Joint Continental Strategy for COVID-19 Outbreak in March 2020 as a blueprint and master plan for coordinating regional efforts to ensure synergy and minimize duplication, to save lives and support African social and economic development.

They commended the various initiatives undertaken by ECA in supporting member States in the World Trade Organization Agreement on Trade Related Aspects of Intellectual Property Rights on vaccines, debt relief and the issuance of Special Drawing Rights by the International Monetary Fund.

The experts requested ECA, in collaboration with the African Union Commission and all relevant stakeholders, including the private sector, to assist African Member States in putting in place continental strategies and policies to facilitate the production of vaccines on the continent, improve pooled procurement, particularly through digital technologies, as exemplified by the African Medical Supply Platform, and leverage the use of digital tools in national supply chains for improved accessibility for all. 

This will improve affordability and accessibility of vaccines and assist in generating inclusive economic growth, stimulating job creation, and eradicating poverty for the continent’s socio-economic development and sustainable growth.

The ECA was urged to continue supporting member States in vaccine procurement, including through additional funding available from debt relief of the G20 Debt Service Suspension Initiative, development finance institutions and SDRs.

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