PREVIEW
US aid cuts and tariffs increase need of African states to get a fairer deal on debt
An expert panel chaired by Nobel prize-winning economist Joseph Stiglitz has called for a new round of debt relief for African countries to prevent a ‘perfect storm’ of rising financing costs making it harder for them to fund healthcare and education (Vol 66 No 7, Mahama’s plans clash with IMF strictures).
The Jubilee Report, commissioned by the late Pope Francis, warns that market pressures are already pushing African governments to ‘prioritise timely debt payments over essential development spending. This is not a path to sustainable development. Rather, it is a roadblock to development and leads to increasing inequality and discontent’.
The last major round of debt relief was the Heavily Indebted Poor Countries initiative two decades ago which wrote off over US$100 billion in sovereign debt.
On top of the tariffs threatened by United States President Donald Trump, most African states are weighing up how to plug budget holes in education and, in particular, healthcare spending created by the suspension of most US aid.
The report is timely given that sovereign debt is set to be one of the main dividing lines at the Financing for Development conference in Seville that starts on 30 June. Wealthy states, led by European Union members and the United Kingdom, have successfully blocked a proposal by the Africa group to shift global rulemaking on debt from the G20, Paris Club and International Monetary Fund to United Nations institutions (Vol 66 No 12, Amid the turmoil, some room at the top). The US and China have stayed quiet in the debate, though insiders in New York tell Africa Confidential that they are likely to abstain if the issue is pushed to a vote in Seville.
One of the complaints raised by African diplomats in the talks ahead of the summit is that they have almost no representation in the multilateral organisations that make debt policy, leaving them at the mercy of creditors.
The debate mirrors a dispute over the creation of a UN tax convention, which started work in January after the Africa group in the UN secured a hefty majority, despite the opposition of the US, UK, Japan and the EU.
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