ADDIS ABABA – Prime Minister Abiy Ahmed once again requested the developed world for the support of low-income countries by taking “immediate and forceful action on debt”.
His latest appeal came on behalf of low-income countries or more specifically Africans in an opinion piece he published on the New York Times Thursday entitled “Why the Global Debt of Poor Nations Must Be Cancelled.”
While delaying the repayments is a good thing but not enough, immediate and forceful action on debt “will prevent a humanitarian disaster today and shore up our economy for tomorrow,” he said.
“We need to immediately divert resources from servicing debt toward responding adequately to the pandemic. We need to impede a temporary health crisis from turning into a chronic financial meltdown that could last for years, even decades” Abiy wrote.
Recalling the temporary relief offered by a Group of 20 countries on April 15 to some of the world’s lowest-income countries by suspending debt repayments until the end of the year, Abiy admired the move as “a step in the right direction and provides an opportunity to redirect financial resources toward dealing with the coronavirus pandemic.” But even that was far from laudable.
“But if the world is to survive the punishing fallout of the pandemic and ensure that the economies of countries like mine bounce back, this initiative needs to be even more ambitious,” he argued.
Abiy’s argument extends from the time framework to the facilities. In
terms of time framework, Abiy says, “At the very least, the suspension of debt payments should last not just until the end of 2020 but rather until well after the pandemic is truly over. It should involve not just debt suspension but debt cancellation.”
“The moratorium must be extended until the coronavirus health emergency is over or cancelled altogether. The creditors need to do this unconditionally,” he said.
Abiy further requested that even those steps need to be taken with a sense of urgency. “The resources freed up will save lives and livelihoods in the short term, bring back hope and dynamism to low-income economies in the medium term and enable them to continue as the engines of sustainable global prosperity in the long term.”
And here is just a grim reality cited by the prime minister.
In 2019, 64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health. Ethiopia spends twice as much on paying off external debt as on health. It spends 47 percent of its merchandise export revenue on debt servicing.
So the question is does Ethiopia “continue to pay toward debt or redirect resources to save lives and livelihoods?” adding that “lives lost during the pandemic cannot be recovered; imperilled livelihoods cost more and take longer to recover”.
The argument is that low income countries can use the financial resources freed up by cancellation or further deferment of debt repayments to invest in their battle against the pandemic, from providing necessary medical care to their citizens to ameliorating our financial difficulties.
This is not the first time Abiy called upon the world in support of Africans or low-income countries. He expressed his opinion in several major international media. In an opinion piece he wrote on Bloomberg on April 12, 2020, Abiy called upon the developed world to cancel $150 Billion for Africa.
Similarly, in the opinion piece published by the Financial Times on March 25, Abiy wrote: “If Covid-19 is not beaten in Africa it will return to haunt us all. Only a global victory can end this pandemic, not a temporary rich countries’ win.”
“Advanced economies are unveiling unprecedented economic stimulus packages. African countries, by contrast, lack the wherewithal to make similarly meaningful interventions. Yet if the virus is not defeated in Africa, it will only bounce back to the rest of the world” he argued.
In all appeals, Abiy’s theme is similar and clear: the world can live together or sink together. If the developed world doesn’t heed to the dire needs of African or other low-income countries, their choice does not make the world safe.
The Ethiopian Herald May 2/2020
BY STAFF REPORTER
