|The News in Brief
Developed nations are formulating a plan which will enable low-income countries break the shackles of Debt which has stunted its economic growth and hindered investment due to bad credit ratings.
The framework for the deal, a special-purpose vehicle, is being designed by the UNECA, African Union, and African finance ministers.
The deal is espoused by the United Nations committee steering the initiative.
The debt-swap deal would channel payments due this year on international bonds back to the African nations, helping them fight the coronavirus and its economic impact. Investors would be compensated with securities issued by an international organization set up to monitor the use of funds and guaranteed by the central banks of richer nations or bilateral lenders, according to the plan.
“We have at least three countries that are interested but we’re trying to bring them together to form a group,” Vera Songwe, the executive secretary of the UN Economic Commission for Africa, said in an interview. The framework for the deal, a special-purpose vehicle, is being designed by the UNECA, African Union, and African finance ministers.
Songwe declined to name the G-20 member central banks with talks still ongoing but said there was hope for progress on the matter in the next few weeks.
The action plan
The proposal has been put forward as a way to allow private creditors to join a debt-relief plan for low-income countries that have been pushed to the brink of insolvency in the pandemic. The G-20 group of nations has already pledged to suspend payments on official loans this year.
In addition to accessing liquidity for debt-service payments, countries are also discussing how to rebuild their economies and where liquidity for that would come from, Songwe said.