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Promised 'new dynamic' at summit meets entrenched caution on debt and finance

European leaders and international officials ensured the discussions were more about recycling prior pledges

Talk of a 'New Deal' with 'urgency' and 'ambition' for Africa ahead of the grand summit in Paris on 17-18 May ultimately produced no new continent-wide commitments on debt and investment.

President Emmanuel Macron insisted the summit, which brought together 21 African leaders, the heads of the International Monetary Fund, the African Development Bank, and the European Union, had shown a 'collective awareness, a change of mindset and the launch of a profound dynamic.'

On debt restructuring, the summit communiqué promises little beyond a vague pledge of 'flexibility on debt and deficit ceilings', alongside urging countries to undertake 'necessary reforms at the national level' (AC Vol 62 No 10, Emmanuel l'Africain II).

Although widely criticised as inadequate and skirting around the problems of commercial debt, the Group of 20's Debt Service Suspension Initiative is set to remain the main initiative to offer relief to African's hard-pressed and indebted treasuries. Last year President Macron was advocating substantial write-offs of both public and private sector debt.

Prior to the Paris summit, several rich countries agreed to transfer their share of the US$650 billion new issuance of the IMF's reserve currency, the Special Drawing Right, to Africa's central banks to ease liquidity problems. This followed United States backing for the new SDR issuance.

But the summit produced no agreement on either the quantity or mechanisms of the transfer of the SDRs to African economies. President Macron called for a target of $100bn in SDRs to be transferred by the end of the year.

This is likely to be done on an ad hoc basis. Some countries have proposed using some of the SDRs to fund a new IMF mechanism to help countries hardest hit by the pandemic; others want to use some of the SDRs to finance an expansion of the UN's Covax initiative to expand vaccine availability across Africa, South Asia and Latin America.

The biggest breakthrough in Paris this week came at the special conference on Sudan which brought together an impressive group of investors, including telecoms pioneer Mo Ibrahim and Nigeria's cement and farming magnate Aliko Dangote. 

Alongside several new investment pledges, France, which is Sudan's second biggest creditor, offered a $1.5bn bridging loan to allow Khartoum to pay off arrears to the IMF and enter its debt restructuring programme. 

France also announced it would cancel another $5bn of debt it is owed by Sudan, another important step in cutting the Khartoum's $60bn foreign debt. Will the next concessions come from China and those big creditors in the Gulf, United Arab Emirates and Saudi Arabia?

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