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Financial aid and debt relief crucial for Africa, says IMF

The International Monetary Fund (IMF) on Wednesday said donor aid, including debt relief, was crucial for vulnerable African countries facing an unparalleled threat from the coronavirus pandemic.

Sub-Saharan Africa is facing “an unprecedented health and economic crisis… that threatens to throw the region off its stride, reversing the encouraging development progress of recent years,” the IMF said.

“Broad based support from development partners is essential to help the region prepare health systems and raise much-needed financing,” it said in a regional economic forecast.

“This is an unprecedented crisis, and our member countries need us now more than ever before,” the IMF’s Africa director, Abebe Aemro Selassie said.

The Fund said African governments were responding in various ways to deal with the pandemic’s economic fallout.

Even so, its most vulnerable countries would inevitably need help on debt.

“Support from all development partners is essential to address the sizable financing needs, including debt relief for the most vulnerable countries,” said the report.

Immediate debt relief is being given to “the poorest and most vulnerable countries … freeing up resources for health and social protection,” said Selassie.

“We have enough resources to provide this debt relief for this year,” said Selassie. “The resources have come from donations from members of the IMF, including the UK and Japan.”

Selassie told reporters in an online press conference that the crisis was unlike any in history, including epidemics of Ebola and the 2008 global financial crunch.

“No countries will be untouched, all the countries will be impacted… because the shock is so widespread,” he said.

The IMF expects Africa’s gross domestic product to shrink by 1.6 percent in 2020 — the “worst result ever recorded.”

The World Bank, for its part, has warned that the region could slip into its first recession in 25 years and called for debt relief.

The African Union last week also called for the cancellation of total African external debt, which is valued at $236 billion.

The IMF earlier this week approved immediate debt relief for 25 poor countries, most of them in Africa, to help them free up funds to fight the coronavirus pandemic.

The Group of 20 wealthier nations on Wednesday said they backed a “time-bound” — temporary — halt to debt payments by the poorest nations.

“All bilateral official creditors will participate in this initiative,” it said, appealing also to private creditors to take part.