Economic response to Covid discussed

2nd April 2021

United Nations Economic Commission for Africa (ECA) executive secretary Vera Songwe last month met with African ministers of finance as well as International Monetary Fund (IMF) MD Kristalina Georgieva to discuss the immediate economic response to the Covid-19 pandemic.

During the virtual meeting, which was convened by the ECA and IMF, the ministers were unanimous in their call for additional liquidity, $500-billion in Special Drawing Rights, better market access, more concessional resources and an extension in the Debt Service Suspension Initiative (DSSI), given the prolonged nature of the pandemic.

“We all know that the Covid-19 pandemic will persist for the next two to three years. “Why are we extending the DSSI for six months and not 24 months?” said Ghanaian Finance and Economic Planning Minister Ken Ofori-Atta.

He added that the cascading effects of Covid-19 were “a frightening thing for a finance minister to witness when not having the means to respond”.

On access to the markets, Egyptian Finance Minister Mohamed Maait added that “there’s a strong case for vulnerable countries to access the markets at an affordable rate to afford essentials such as personal protective equipment and food for their populations”

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Equitable access to Covid-19 vaccines was highlighted as an imperative for building forward better.

“The world stands to lose an estimated $9-trillion if only the rich get Covid-19 vaccines. About 40% of this loss will be in advanced economies,” said Georgieva.

In addition to vaccine availability, Songwe stated that the issue of distribution and deployment were also worthy of serious attention and, for this reason, countries needed additional fiscal space and less austerity.

Georgieva noted that to build forward better, there was need for “bold and immediate action for response, recovery, and reset of African economies”, adding that “liquidity and financing response is the bridge to vaccines and recovery”.

The objective of the meeting was to seek IMF support in forging a way out of the crisis by transforming existing liquidity instruments and easing market access to alleviate the debt burden and provide much needed liquidity for the continent, said Songwe.

Having noted that Songwe’s call, with consensus from the finance ministers, to triple concessional financing, was “critical in the Spring Meetings conversations last year”, Georgieva urged the ministers to prepare for a focused and practical discussion during the 2021 Spring Meetings.

Angolan Finance Minister Vera Esperança dos Santos Daves De Sousa emphasised the importance of country reforms and in particular good governance reforms as a component of the response and recovery plan. She stated that Angola had committed to continuing on its reform path.

The meeting agreed on the need for a concerted effort to accelerate reforms to increase revenues, improve expenditure and manage debt to attract more private-sector investments into Africa.