The president of the World Bank, David Malpass has said he, alongside the Managing Director of the International Monetary Fund (IMF), Ms. Kristalina Georgieva, are in talks with creditors to get debt reduction for International Development Association (IDA) countries, which Nigeria is part of.
Speaking at a press conference at the ongoing World Bank/IMF 2020 Annual Meetings in Washington DC yesterday, Malpass said the move was part of talks to help IDA countries who are struggling with debt avert a debt crisis.
“The tendency in past debt crises is for countries in debt distress to go through a series of ineffective debt rescheduling that leaves them weaker. Creditors may eventually allow them to get to a debt reduction process, but at a tremendous cost to the poor. We need to work better and faster this time.
“While there’s been G20 discussion of a common framework on debt treatment, it’s important that it not just kick the can. Given the urgency of the debt crisis, the IMF and World Bank have proposed that we undertake a joint action plan on debt reduction for the most indebted IDA countries. We’ll discuss it this week with Governors during our Annual Meetings. It’s urgent to make rapid progress on a framework because the risk of disorderly defaults is rising.
“The scale of the challenges ahead is staggering, so we need to do more. With the strong support of its shareholders, IDA has frontloaded IDA-19 resources to the fullest possible extent as a key part of the surge in our commitments this fiscal year. However, IDA lending would have to decline in the next two years even though the latest forecasts, including those just announced by the IMF, suggest that the reduction in economic activity will extend well into subsequent years. We are proposing to IDA Deputies later this month a $25 billion supplemental COVID Emergency Financing Package. We’ll be grateful, as always, for your support,” Malpass added
Speaking at a different briefing, IMF Managing Director, Ms. Kristalina Georgieva noted that the cumulative funding needed for Africa between now till 2023 for Africa to get out of the COVID-19 health and economic crisis is pegged at $1.3 trillion.
She also urged member countries of the fund to give additional concessionary loans and low interest financing to Africa to aid the continent bridge the financing deficit.
Responding to questions on what is needed for the African economy to grow, Georgieva said “The continent of Africa is being severely hit and as a result over the next years between now and 2023, $1.3 trillion financial gap and that is what Africa needs. Out of this, as of today, we still do not know how we would fill $245 billion.
“We have to make it possible to raise resources for Africa with Africa and for that we need the African countries themselves to concentrate on ambitious reforms to make themselves more attractive for investment from private sector and also to be more capable to mobilise domestically finances for the recovery from the crisis for growth in the future. We also need the international partners of Africa to do more.
“The fund in the last six months has done 10 times more than what we do in an average year. We have provided to the continent of Africa $26 billion in emergency financing and other types of financing and of this, close to $16 billion went to Sub Saharan Africa.”
She urged more support membership countries to enhance their support towards Africa by give more concessionary financing she said: “We are going to continue to do more and we have made a strong call to our membership for more concessionary financing, for subsidy resources so we can extend more support for Africa