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External Debt Relief: A Ray of Sunshine for African Economies

Global Market	1040 VIEWS
Global Market
1040 VIEWS

Friday, March 27, 2020 / 2:30 PM / United Capital Research / Header Image Credit: The World Bank Group

Recently, in a bid to provide relief to developing economies affected by the COVID-19 pandemic, the World Bank and International Monetary Fund (IMF) announced the suspension of debt repayments by the world's poorest countries, under the International Development Association (IDA). Also, the two supranational agencies went a step further, by calling on other official bilateral creditors, to suspend debt payments from IDA countries that request forbearance (temporary postponement of debt payments).

For context, the World Bank, through the IDA and the International Bank for Reconstruction and Development (IBRD), is currently providing credits and loans to about 35 African countries. As at 31st Jan-2020, the original principal value of IBRD loans and IDA credits for select countries were: Nigeria ($11.5bn), Ghana ($4.0bn), Kenya ($8.5bn), Cote d'Ivoire ($3.5bn), Senegal ($2.9bn), Benin ($1.4bn), Burkina Faso ($2.0bn) and others.

No doubt, this action could not have come at a better time for African economies, as city lockdowns and restrictions, as well as the volatility in the price of key export commodities are expected to slow down economic activities and significantly drag government revenue generation. Also, this gives more room for fiscal and monetary resources to be directed at palliating the negative effects of the COVID-19 break, by promoting easy access to credit, liquidity and softer terms for businesses, fiscal stimulus, as well as developing critical healthcare infrastructure.

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Looking Forward

Angola

Mar-2020 Benchmark Interest Rate - March 27th

Mar-2020 CPI YoY - April 15th

Egypt

Q4-2019 GDP Report - March 31st

Mar-2020 IHS Markit Egypt PMI - April 5th

Ghana

Q4-2019 GDP YoY - April 15th

Mar-2020 CPI YoY - April 15th

Kenya

Mar-2020 CPI YoY - March 31st