How to get Africa Out of Debt
Many African countries were already in debt distress before COVID-19, and the pandemic has made it worse, lifting average debt-to-gross domestic product (GDP) ratios from about 60% to 70%. The G20/Paris Debt Service Suspension Initiative (DSSI) was introduced to suspend official bilateral debt service payments of the poorest countries from 1 May 2020 until the end of the year, releasing funds for them to tackle the pandemic. It has now been extended until June 2021. But much more is needed. Private creditors and multilateral development banks (MDBs) have not joined and some eligible DSSI countries have elected not to participate, for fear of being downgraded by credit rating agencies. In addition, many African countries are facing not just temporary liquidity crunches but also long-term solvency crises. The UN should convene a global forum of stakeholders to find a permanent solution to indebtedness. This should include binding measures to ensure responsible lending and borrowing to forestall yet another broad debt crisis.