The IMF and World Bank have called for a halt to debt servicing for the world’s poorest countries as the World Bank Group latest report revealed that sub-Saharan Africa was going into recession with initially projected 2020 growth adversely affected by the impact of the COVID-19 outbreak.
The IMF says the standstill of debt service to official bilateral creditors for the world’s poorest countries should help economies deal with the strong negative effects of COVID-19, particularly the sub-Saharan region whose growth is forecast to fall sharply and push the region into recession for the first time in over25 years.
“The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” said Hafez Ghanem, World Bank Vice President for Africa.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security.”
IMF Managing Director, Kristalina Georgieva said in a statement that the institution was working “24/7 to support our member countries – with policy advice, technical assistance and financial resources”.
In a delivery entitled “Confronting the Crisis: Priorities for the Global Economy”, Georgieva set out a four priority action points list to deal with the COVID-19 impact and said that the IMF had $1 trillion in lending capacity and were placing it at the service of the membership.
“We are responding to an unprecedented number of calls for emergency financing—from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing. Lending programs have already been approved at record speed – including for the Kyrgyz Republic, Rwanda, Madagascar, and Togo—with many more to come,” Georgieva said adding; “And together with the World Bank, we are calling for a standstill of debt service to official bilateral creditors for the world’s poorest countries”.
According to the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region, growth in the sub-region is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020.
As a result of the impact of the COVID-19, analysis shows that the region will suffer losses ranging from between $37 billion and $79 billion in output losses for 2020 due to a combination of effects.
They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response.
Several African countries, including Zambia, have reacted quickly and decisively to curb the potential influx and spread of the coronavirus, very much in line with international guidelines. However, the report points out several factors that pose challenges to the containment and mitigation measures, in particular the large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems.
The World Bank report recommended that African policymakers focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains. They also recommend implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.
Pheww , what a relief ayi KZ.
Unfortunately our debt is not from WB and IMF. The Chinese banks and Euro bond investors will demand for their pound of flesh! I dread to think of what will happen when the time comes for that Euro bond bullet payment. Ba ABC ati we will create a sinking fund. My foot! Where is the sinking fund? He actually meant sinking the country. How did we as Zambians get ourselves in this mess? Allowing UNIPists (rebranded as PF) to ruin the country’s twice. Never, never again!
Haha when I called for this weeks ago a lot of opposition and disaporans said that the IMF and world bank would not ever support such. This is evidence that the effects of covid are on a global scale and Zambia is not immune. We are not isolated from world. We are connected on the global market.be easy
We really need that in Zambia for our economy survival.
It’s simply in their self-interest to do it. Despite all the economic injustices they have put us through, they know that in the long a stable African economy is more profitable for them than a weak one.
read: “in the long run..”
Halting is not the same as stopping. The ideal scenario would be total write off to give us breathing space but with the likes of KZ who boast about having 2 properties in the UK, the write off will just enrich him to buy more. I really hope the government can resolve the load-shedding illness because this really sucks the juice out of development. What’s the point of investing in a ventilator when you have no power to switch it on? Don’t be fooled, the European countries are in more debt than the rest of the world put together. The difference is in how they manage it. The UK for example only completed paying off it’s WW2 debt in 2006. We need responsible leadership at local level.
How I wish the money we borrowed was invested in production and manufacturing. Bu now we would have had power to tell Mopani to f2ck off. Nomba mukembwe wacipuba. Ukukongola ukufilwa nokupwisha nangu cimo.
It will be nice to know how much of Zambia’s current external debt is from IMF/World Bank. More so that our intended IMF bail out hasn’t gone thru
Thank you Jesus! God is always just on time..
IMF and WB aren’t limited companies. They can always afford it because it’s member nations that stand behind them. Bondholders and commercial banks that Zambia borrowed from will hv none of that. We hv to cough up. Hw PF leaders thought a sinking fund was possible from a nation wth a huge budget deficit, only they could imagine that. U need a budget surplus to build a sinking fund.
Sadly for Zambia most of their debt is with China (Exim bank) and loan sharks in Europe(Euro bond)
Chiluba and Mwanasasa were lucky as most of the debt was with the Western bilateral partners and World Bank.
Besides halting the debt servicing will result in more corruption. Let the debt payments go to a world health fund instead so that testing kits and protective equipment can be purchased.
“IMF and World Bank have called for a halt to debt servicing for the world’s poorest countries.”-LT
“Give someone enough rope (to hang themselves)”
To allow someone to do something in the way that they want to when you know that they will probably fail.
@Chichi. Sadly Zambia has lost capacity to operate mines not because
of technical/operational competence reasons but due to political interference and the resultant nepotism, tribalism, over-employment, corruption, thieving etc. Ndola lime ( a quarry) has be run to the ground. With 200m usd lost to an Italian dodgy supplier. What makes you think Nkana and mufulira mining complexes can be managed by a quasi govt institution that has failed keep a quarry afloat or whoever you have in mind. I bet you, KCM is going under. It is not a question of if, but when. Let us sort out loadshedding & mealie meal problems before you even think of (God forbid) grabbing mines. We are an indisciplined people and our casual attitude to governance and ethics has &will continue to make pay dearly. We are…
@Bashi Chite, 100% CORRECT!! We need to refine ourselves before we can dream about such a daunting tasks. If ZESCO despite being a monopoly cannot run profitably and provide power 24/7, if Zamtel which is in a lucrative industry of telecoms is limping, WHAT HOPE OR AUDACITY CAN WE HAVE TO RUN MINES! The ills you have mentioned are what killed the mines under ZCCM, we had all the technically competent people capable to run the mines effectively but for those vices, they were made handicapped!!
IMF and World Bank are lobbying other players on the market which includes China etc from whom we had gotten kaloba to halt debt servicing for sometime till Covid-19 pressure is eradicated.. we appreciate that.
Kaiser, I remember how people
insulted habazooka.
I supported him that this was a clear.Fprce Majeure condition.
Let’s go for it please
Does a halt to debt service help those who were already in debt distress and could not pay back even a dollar of debt? I think IMF and World Bank should be talking about lending us more while suspending debt service.
After it has been said that there is no country in the world which does not borrow. Here now is a practical reality.
Imwe read the title properly, its “halt” and not “cancelled”. Which means, when the pandemic is over, they ll knock on your step ” Lipila mwana” atishani ukko! Uwona kwati tinaibala. Ubepele fye.
God always coming through for Zambia and Africa. It’s time we stopped borrowing for government ministers to steal. Thank you Jesus. PF and UPND should now shut up and get to working for the nation.
Lets wait and see. Inkongele shafulisha kuliba China. Halting , doesnt mean that China wont ask for his money. Corona ngayapwa. They will still ask for their Kaloba.
Everything pointing in favour of a PF 2021 victory….