Thread by @MssZeeUsman

The global discussion around debt relief for low-income and fragile countries during #COVID19 is gathering momentum. There are various dimensions to the current debt situation, especially for #Africa. Here’s a short thread for those interested to follow the discussions 1/n

The World Bank and IMF recently issued a joint call to the G20 for temporary suspension of debt service payments by IDA countries (low-income and fragile countries) to help provide liquidity in these countries to tackle #COVID19 2/n imf.org/en/News/Articl…

A group of high-profile Africans (incl. Okonjo-Iweala, Thiam, Songwe) are calling for debt relief for African countries. Specifically, they are calling for a "two-year standstill on all external debt repayments, both interest & principal." 3/n

brookings.edu/opinions/afric…

To get a sense of the debt profile in Africa, this paper is a good source. Shows that a large & growing share of govt debt is owed to commercial creditors, compared to multilateral, Paris Club bilateral and non-Paris Club bilateral lenders 4/n
documents.worldbank.org/curated/en/370…

This podcast with Tim Jones of the Jubilee Debt Campaign also offers an interesting perspective. Despite the title, the discussion is *not* just about Chinese loans in Africa. There’s a good primer on the how and why of Africa’s overall debt profile 5/n open.spotify.com/episode/03dqJk…

Good summary of the debt situation in #Africa by @kcsalmon in @TheEconomist

▪️15 African countries spent more on ext. debt service than on their public health sys
▪️#COVID19 fiscal stimulus in high-income countries is 8% of GDP, in Africa it is 0.8% 6/n

economist.com/middle-east-an…

Some good news! The IMF just approved immediate debt service relief to 25 of the poorest & most vulnerable countries.

A grant will be provided to these countries to cover their IMF debt obligations for 6 months to create fiscal space to tackle #COVID19 imf.org/en/News/Articl…

20 of the 25 countries to receive IMF debt service relief are in Africa: Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., Gambia, Guinea, G-Bissau, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, São Tomé & Príncipe, Sierra Leone, Togo.

The G20 has agreed to suspend bilateral debt service payments for six months for 76 countries starting May 1

This moratorium is worth ~$20 billion, covers *only* bilateral debt

The 76 countries are low & lower-middle-income, eligible for IDA 7/n
ft.com/content/5f296d…

The G20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea​,​ Russia, Saudi Arabia, South Africa, ​​​Turkey, the U.K., USA and the European Union (EU)​. 8/n

g20.org/en/about/Pages…

South Africa's President, Cyril Ramaphosa, calls for a two-year debt standstill for African countries to provide them with fiscal space to fight COVID19. The continent needs an immediate emergency economic stimulus of $100 billion 9/n

bloombergquint.com/business/afric…

The AU, UNECA & African finance ministers are designing a special-purpose vehicle to swap their sovereign debt of $16.25bn for concessional paper. This aims to allow countries avoid using scarce funds, needed to fight COVID19, to pay private creditors 10/n finance.yahoo.com/news/africa-ey…

Africa's Private Creditors Form Group to Negotiate #DebtRelief

The group represents 25 asset managers & institutions

African countries are asking for suspension of $44 bn in debt payments this year to channel scarce resources to fight #covid19. 11/n
bloombergquint.com/onweb/private-…

...but these private creditors also push back against blanket #debtRelief for #Africa

The Africa Private Creditor Working Group, which represents over 25 asset managers & fin. institutions, instead calls for a "case-by-case" approach to debt relief 12/n
reut.rs/2WRFuVC

Rodrigo Olivares-Caminal urges caution in calling for blanket debt moratorium for #Africa. The unintended consequences could be increased costs of future borrowing from global capital markets 13/n

theconversation.com/moratorium-on-… via @TC_Africa

Earlier this week, China, announced suspension of debt repayments for 77 low-income countries. This is part of the G20 debt relief initiative.

Details are scanty on beneficiary countries and the timeframe for the moratorium on debt servicing. 14/n voanews.com/east-asia-paci…

In this piece, Yun Sun analyzes the circumstances and implications of the two recent commitments made by #China on #debt relief for #Africa 15/n

brook.gs/3e08qm1 via @BrookingsInst

This infographic by @africapractice nicely maps the #debt to GDP ratio in sub-Saharan #Africa. There are indeed some African countries in the red, but the continent as a whole is not yet facing a debt crisis 16/n

On 19 June, the World Bank created a virtual one-stop info shop on the public external debt for 73 countries eligible for the Debt Service Suspension Initiative (DSSI). The portal shows the bilateral, multilateral & private lenders for each country 17/n

worldbank.org/en/topic/debt/…

An interesting twist... Some African countries, like Kenya and Nigeria, say they will not be requesting a moratorium of bilateral & commerical debt service payments. They do not want credit downgrades to affect their future borrowing (esp. from capital markets) Links below 18/n

On 23 June, #Nigeria announced that it will not request a delay in debt-service payments this year from bilateral & commercial creditors. Appears to be a shift from its request in May for #debt relief to create the fiscal space to deal with #covid19 19/n bloomberg.com/news/articles/…

On 15 May, #Kenya announced that it will not seek a blanket suspension of its #debt service payments. Kenya doesn't want to jeopardize access to int'l capital markets. Like a number of countries, it is opting to negotiate with individual creditors 20/n

af.reuters.com/article/idAFKB…

Still on #Kenya, it is opting to reduce #tax exemptions/waivers as a way of shoring up government revenues and plugging its budget deficit.

According to government figures, these tax exemptions amounted to $5.03 billion or 6% of GDP in 2018 21/n

reuters.com/article/us-ken…

The next couple of tweets will highlight some fascinating research and analysis on #China's lending in #Africa. I'm limiting the tweets to a few papers and official sources that I've found useful and informative 22/n

This June 2019 paper argues that about half of #China’s lending to developing countries is not captured by conventional measures & databases of external debt reporting. It says these “hidden debts” affect debt sustainability in recipient countries. 23/n

ifw-kiel.de/fileadmin/Date…

In Apr 2020, Deborah Brautigam of SAIS-CARI questions the "hidden lending" analysis done in the June 2019 paper 👆🏿 esp. for Africa. Brautigam says that once China's loan commitments are distinguished from actual disbursements, the figures are lower 24/n

chinaafricarealstory.com/2020/04/is-chi…

In this May 2020 blog post, the authors of the June 2019 paper respond to criticisms by Brautigam, the World Bank and the IMF of their earlier analysis on "hidden debts" in developing countries to China 25/n cgdev.org/publication/ch…

New paper by Brautigam reviews evidence on China’s debt cancellation & restructuring in Africa. Btw 2000 & 2019 China has
- offered debt write-offs only for zero-interest loans.
- cancelled ~$3.4bn of debt
- restructured/refinanced $15bn of debt 26/n

sais-cari.org/event-details/…