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| Motorists drive in traffic along a highway as pedestrians walk on the walkways before a curfew, which is a measure to contain the spread of the coronavirus disease (COVID-19), in Nairobi, Kenya May 13, 2020. REUTERS/Thomas Mukoya |
Prominent emerging market creditors have set up a new group to help heavily-indebted African nations coordinate responses to the economic impact of COVID-19, but have also criticised recent calls for blanket debt relief.
The Africa Private Creditor Working Group (AfricaPCWG) will coordinate the views of over 25 asset managers and financial institutions representing total assets under management in excess of $9 trillion, it said in a statement on Friday.
It will provide African governments, the G20 group of major economies, the International Monetary Fund (IMF) and other multilateral development banks a forum through which all stakeholders “can engage transparently and constructively” on issues from the coronavirus crisis.
African governments are fighting to manage the fallout from the coronavirus, which the World Health Organisation has warned could infect between 29 million and 44 million on the continent in the first year if not contained.
African countries face a combined $44 billion debt-servicing bill this year alone.
The working group said it “stands ready to buttress efforts being made by the multilateral and bilateral sectors by offering its collective institutional experience to provide guidance and support on a case-by-case basis”.
However, it added a one-size-fits-all solution would be counterproductive. The G20 has urged private creditors to match their proposal to allow the poorest nations suspend debt payments for the rest of the year.
It announced on April 15 an agreement with the Paris Club group of major creditor nations to freeze debt payments for the 77 poorest countries from May 1 to the end of the year, as requested, to free up cash for the pandemic.
But the Institute of International Finance (IIF) trade association, which previously issued a rallying call to the private sector to join the initiative, earlier this month flagged creditors’ concerns to the IMF, World Bank and Paris Club about their involvement in such a move.
“A rushed, blanket approach developed during a time of crisis will put that crucial long-term access to capital at risk,” the AfricaPCWG said.
Farallon Capital Europe, Aberdeen Asset Management, Amia Capital, Greylock Capital Management and Pharo Management were among the members of AfricaPCWG.
It declined to name the other members.
REUTERS
