The President of the Republic, Nana Addo Dankwa Akufo-Addo, has urged the international community to step up efforts to assist developing countries in dealing with the devastation caused by the deadly coronavirus pandemic.
Speaking at the ongoing 15th Edition of the European Development Days (EDD) in Brussels, Belgium, on Tuesday, June 21, 2022, President Akufo-Addo revealed the deleterious consequences of Russia’s ongoing invasion of Ukraine on African economies and what lies ahead for developing countries, citing a recent United Nations report estimates seventy percent (70%) of Africa’s economies are under severe threat from Russia’s war in Ukraine.
“The World Bank also tells us that, after 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 lamented.
According to the President, developing economies have had their plights further worsened by the raging Russian/Ukrainian conflict, a development that is having a toll on only Ghana and Africa in particular but also many of the developing countries.
He further noted that amid Russia/Ukrainian war, eighteen (18) African economies have experienced credit downgrades. Even though all economies are suffering adverse fallouts from last year’s pandemic, African economies, in addition, are facing the risk of so-called “taper-tantrums”, as investors exit the markets, thereby exacerbating the increasing cost of borrowing.
“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,” he added.
President Akufo-Addo indicated that an amount of six hundred and fifty billion (650 billion) Special Drawing Rights (SDR), approved for the International Monetary Fund (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).
He mentioned that 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.
“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.
He, therefore, concluded by saying that the combined effects of the debt situation, rising interest rates, and rising cost of living are resulting in severe macroeconomic and financial instability, adding that “what is clear, is that the ensuing damage cannot be cured so easily with the limited fiscal tools at our disposal and national policy adjustments.”
