2023-10-10 12:00:09
For the first time in fifty years, Africa is hosting the annual meetings of the International Monetary Fund (IMF) and the World Bank, a continent hit by numerous crises, from the Covid-19 pandemic to the war in Ukraine, in passing through the inflationary wave. Finance ministers and central bank governors from 190 countries are meeting in Marrakech until October 15 to discuss the overindebtedness of developing countries, the fragmentation of the world economy, the climate, and the reform of institutions international, only a few dozen kilometers from the tents which shelter the populations survivors of the earthquake of September 8, which left almost 3,000 dead and more than 5,000 injured. A summit maintained at the request of Morocco.
Poor countries crushed by debt
Raising key interest rates to curb inflation is a new blow for poorer nations, whose loans are more expensive to repay. The United Nations Conference on Trade and Development (UNCTAD) estimates that 3 billion people live in countries that spend more on debt repayment than on health and education. Half of low-income countries and a quarter of emerging countries are close to a debt crisis or are already there, according to the latest IMF estimates.
It is difficult for them to negotiate a rescheduling with increasingly numerous and disparate creditors. A new restructuring framework was put in place by the G20, in 2021, to bring China and the other creditor countries, most of them Western, of the old Paris club to the table. This frame “starts to produce results, even if it is too slow”recognized Kristalina Georgieva, the Managing Director of the IMF, on October 5.
“Indebted countries prefer to swallow the pill and tighten their belts rather than default because this would deprive them of private financing in the future,” explains Ishac Diwan, research director of the Finance for Development Lab think tank. Sacrifices with serious social and political consequences. Protesters took to the streets of Jordan in December 2022 to protest against the high cost of living, while in Angola rising fuel prices fueled anger this summer.
“The international community must put in place a new debt restructuring initiative. We must not wait for countries to fall off the cliff to provide them with aid,” said William Ruto, the President of Kenya, during the United Nations General Assembly in mid-September. The African head of state pleads for a ten-year grace period to restore oxygen to indebted countries which have not yet emerged from the economic crisis linked to the Covid-19 pandemic and are suffering from the consequences of the war in Ukraine or the appreciation of the dollar. He also attacks the financial rating agencies which were unable to predict the crisis that started in the United States in 2008 : “On what basis should we believe that their methodologies are better able to assess risks in distant markets, much more difficult to measure objectively, than the value of financial assets in markets that are familiar to them and which they nevertheless have misjudged? »
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