UNITED NATIONS, Oct. 9 (Xinhua) -- UN Secretary-General Antonio Guterres on Friday called for efforts to address Africa's liquidity constraints caused by COVID-19.
No country has been spared from the pandemic. For African countries, in particular, the crisis has resulted in acute liquidity constraints. Expenditures have outpaced revenues, leading to rising deficits. As of June, Africa accounted for seven of the eight countries in debt distress, and 12 of the 23 countries at high risk of debt distress, said Guterres.
Without bold measures, Africa's liquidity challenge could spiral into a solvency crisis, he warned.
Current mitigation measures by development partners are not enough, he told a virtual high-level event of the World Bank and the International Monetary Fund (IMF) called "Mobilizing with Africa II."
The Group of 20 Debt Service Suspension Initiative provided much-needed relief that needs to be prolonged. And this initiative excludes many developing countries, including middle-income countries and several small island developing states that have been hit hard by the crisis, he said.
"I call on development partners to broaden the initiative's eligibility to include all highly indebted and vulnerable countries that have been adversely affected by the emergency and also to seriously address the structural debt architecture problems."
For their part, the IMF and multilateral development banks have been instrumental in addressing liquidity needs across the African continent. But going forward, far more resources will be needed to support a durable recovery, he said.
"I urge developed countries to support the Liquidity and Sustainability Facility, a special-purpose vehicle which aims to channel concessional investment financing to emerging markets. Since the beginning, I have been advocating for a new issuance of (IMF) Special Drawing Rights (SDRs) as an additional source of liquidity."
The unprecedented nature of this pandemic requires allocations much greater than were made to meet the 2009 financial crisis, he said, maintaining his call for at least 500 billion U.S. dollars in additional SDRs, as well as the voluntary reallocation of idle SDRs from developed to vulnerable countries.
It is also vital to plug the serious leaks that divert vast amounts of funding from where it is needed most, he said.
Combined with tax evasion, illicit capital flight from Africa is estimated at 88 billion dollars, equivalent to 3.7 percent of Africa's gross domestic product and almost the equivalent of official development assistance and foreign direct investment combined, he noted.
Bolstering transparency and exchanging data will be crucial in tackling the enablers and vested interests that benefit from these criminal practices. It is also time to seriously question the role and the very existence of tax havens, he said.
Pandemic recovery must also support the transition to a cleaner, more sustainable future. In that spirit, development partners should prioritize green growth through debt-for-climate swaps. This financing instrument has proved to be effective in achieving the dual objectives of debt restructuring and environmental conservation, particularly in small island developing states, he said.
Partnerships will also be vital as work continues toward a COVID-19 vaccine, treatments and therapies. A vaccine must be seen as a global public good -- a people's vaccine available and affordable for everyone in Africa and, indeed, everyone across the world, he said.
Since the beginning of the crisis, African countries and the African Union have shown commendable leadership and unity in response to the pandemic. The international community must continue to show commitment to Africa's health and well-being, said Guterres. Enditem
