The President Nana Akufo Addo has urged global community to help Africa recover from impacts of the novel Covid-19 and Russia/Ukraine warfare.
In Akufo Addo’s keynote speech delivered at the 15th Edition of the European Development Days (EDD) in Brussels, Belgium, on Tuesday, he emphasized the need for the global community to increase efforts to help developing countries withstand the devastations caused by the deadly coronavirus pandemic.
According to the President, developing economies have had their plights further worsened by the raging Russian/Ukrainian conflict, a development, he said, is having a toll on only Ghana and Africa in particular but also much of the developing countries.
He further revealed the deadly effects of the ongoing Russian invasion of Ukraine on African economies and what lies in stock for developing countries, citing a recent United Nations report estimates that seventy percent (70%) of Africa’s economies are at severe risk from the Russian war in Ukraine.
“The World Bank also tells us that, subsequent to the conflict, the number of poor people in sub-Saharan African countries would rise from four hundred and thirteen million (413 million) to four hundred and sixty-three million (463 million) this year, an increase of fifty million (50 million) persons,” he stressed.
President Akufo-Addo continued, “In the midst of this, eighteen (18) African economies have experienced credit downgrades, even when all economies are suffering adverse fallouts from last year’s pandemic, and we, in Africa, are also facing the risk of so-called “taper-tantrums”, as investors exit our markets, thereby exacerbating the increasing cost of borrowing” he further added.
He noted further said that, at the moment, support for non-IMF programme countries to alleviate the debt burden is limited, as the initial facility designed by the G20 countries to offer respite to economies with elevated debt challenges – the Debt Service Suspension Initiative (DSSI) – has expired since December 2021, and has not been renewed.
In these trying times, President Akufo-Addo observed that an amount of six hundred and fifty billion (650 billion) Special Drawing Rights (SDR), approved for the IMF in August 2021, which was meant to provide significant relief, has seen Africa receive a total of only US$33 billion (about 5 percent).
Moreover, the promise to reallocate some US$100 billion of the SDR allocations to African economies, agreed to at the Paris Summit in May 2019, has so far yielded about US$36 billion in pledges as of April 2022, he indicated.
“Then, there is the matter of the “African Risk Premium”, when African entities are borrowing from the market, which increases the cost of capital, and which must be addressed, especially as Africa provides the highest return on investments obtainable anywhere, and has a good record of debt repayment,” the President said.
The combined effects of the debt situation, rising interest rates and rising cost of living are resulting in severe macroeconomic and financial instability, the President stated, adding that “what is clear, he pointed out, is that the ensuing damage cannot be cured so easily with the limited fiscal tools at our disposal and national policy adjustments,” he added.
