Macron's call for the private sector to accept losses on their lending to Africa might be a short-sighted mistake. There is undoubtedly a moral (and selfish) case for public sector support by the G7/G20 to support less wealthy nations in this global health outbreak ...
But the private sector will already be paying for that via future higher taxation in their home countries. What Macron is suggesting those few private sector lenders who have lent to the poorest countries, should pay twice, now by taking a loss and in the future via domestic tax
For years, the call has gone out to the private sector to fund an estimated $100bn or more in unmet infrastructure needs across Africa. Few have stepped up. Funding this in the decade ahead will be more expensive if Macron wins this debate.
Moreover the leaders who have suggested this, set a precedent. What if the next crisis is Ebola, or drought, or locusts? For some countries, these could be more dangerous than the coronavirus. What will justify the next moratorium? ft.com/content/8f76a4…
There is a financing alternative. G7 governments can literally borrow at around 0% and lend this on, at zero cost, to those countries that need it most, without penalizing the private sector investors who invest in those countries. That is a shared solution to a shared problem
In addition, financial support should surely be directed at those countries with the most acute health needs suffering from the most intense economic shock. Debt relief supports those who have a lot of debt. Debt relief is not well focused on the goal.
To be fair to Macron, he is semi-consistent in that he also asks major private sector companies to avoid saving money at the state's expense eg not take advantage of government aid where it is available ft.com/content/59a80d…
