Nigeria and other African countries have written a letter to the Group of 20 (G20) countries to extend their debt servicing timeline.
They took the step to ensure that debt servicing obligations do not cripple their economies.
The plea is contained in a letter by the Ministers of Finance of Ghana, Senegal and Egypt, on behalf of African Ministers of Finance and Central Bank Governors, and copied to the Chairperson of G20 Chairperson, African Union (AU) Managing Director, International Monetary Fund (IMF) President, The World Bank.
In the letter, the African Ministers of Finance and Central Bank governors said: “We ask for immediate liquidity support akin to the global response during the COVID-19 pandemic to help support our economies.
“The end of the G20 Debt Service Suspension Initiative (DSSI) in December 2021 meant that countries are due to resume payments on their debt obligations, despite a deteriorating global context, particularly for middle and low-income economies on the African continent.
“Given the new crisis, we ask that the G20 members extend the DSSI for two more years and reschedule the deferred interest payments for over five years.”
The DSSI, they said, “created over $12.9 billion of additional fiscal space for countries in need, and a deferment of this would allow countries space to manage the new emerging crisis while planning for a more orderly debt service obligation process”.
The affected countries also urged the IMF to offer “debt service relief to the poorest countries exposed to the shocks, as done before at the onset of the pandemic, including via the Catastrophe Containment and Relief Trust (CCRT)”.
For low and middle-income countries, which Nigeria belongs to, “the IMF should waive surcharges for countries with large borrowings”.
To reduce the cost of debt and to extend maturities, the African Finance Ministers urged the G20 “to review the Organisation for Economic Cooperation and Development (OECD) rules on export credit financing”.
No debt relief has been provided under the Common Framework for debt restructuring scheme, as of July 2022, over 18 months after it was launched.
This is because the G20 has yet to agree that the Common Framework will allow for a debt standstill on application, which increases uncertainty for debtor countries.
“We request that the G20 agree to an overhaul of the Common Framework to make it more effective, time-bound, fast-tracked, transparent, and broad-based by revising its principals, procedures and Secretariat”.
To support their request, the African Finance Ministers regretted that in the last two years, “Africa has been hit by three exogenous shocks that have reversed hard-won socio-economic gains, undermining our combined efforts to protect the vulnerable and achieve our dream of a prosperous Africa”.
They added: “First, the COVID-19 pandemic ravaged economies and livelihoods across the continent. Then, just as countries were on the path to recovery, the war in Ukraine sent food, fertiliser and energy prices spiraling.”
The letter noted that “compared to 2021, import bills for key products, such as wheat, maize and crude oil, have doubled for many countries on the continent”.