In a recent analysis, the Washington-based Institute of International Finance (IIF) indicated that countries such as Egypt, Morocco, Tunisia, South Africa, and Algeria will not benefit from the debt moratorium granted by the G20 to poor countries.

As a reminder, South Africa itself is a member of the G20 and could not benefit from the moratorium, despite the obvious strains on its economy. Also, the Rainbow nation is, along with Egypt, considered a big emerging market. Tunisia and Morocco are among the low-income countries which cannot be granted support by the International Development Association (IDA). Algeria for its part is considered by the World Bank as a high-income country.

A total of 77 countries are qualified for this facility with about 40 of them on the Dark Continent. Angola, although in the same category as Morocco, is considered by the United Nations as one of the less developed countries on the planet, and is thus qualified for the moratorium. The next challenge for the creditors is to define the amount of debt, the payment of which will be suspended.

The G20 said the measure concerns interest and principal debt owned between May 1 and December 31, 2020. This makes 8 months of debt suspended and not all the debt of 2020 as it was previously believed. For all eligible countries, debt service for the current year is estimated at $140 billion. The repayment of the suspended amounts will be made over three years, after a one-year grace period, and the amount will not be revalued at their current value.

Of the aggregate sum, $64 billion is made up of interest and short-term principal debt, most of which are held by private actors including commodity traders and portfolio investors. IIF estimates that by only considering the strictly public debt, the volume of repayment in 2020 would be $45 billion. And of this amount, only $27 billion is due in the framework of the bilateral debt concerned by the moratorium.

The G20 did not guarantee that the other lenders such as the European Investment Bank, the World Bank, and the IMF are ready for the moratorium. It is also not specified whether the investment banks and creditors holding the sovereign bonds of the concerned countries will get involved.

The Organization of the international civil society has already criticized the measure, which according to them will be a drop in a bucket. They say the debt repayment suspension is not immediate. Countries interested will have to submit a request and to commit to spending the available resources on specific objectives, such as improving the health system. The applicant country would also have to be up to date with its contributions to the IMF and World Bank; this would exclude countries such as Mozambique, which has an international lawsuit on its debt.

The aggregate debt amount of eligible countries is estimated at a bit more than $750 billion. The moratorium only covers 3.6% of this amount, reflecting the limited effort made to help them. When compared to the G20's 2019 GDP of $78,286 billion, the total debt represents only 1% of the value created each year by the economies of this organization. A complete debt cancellation as recommended by France would create no danger for the rich countries which in ordinary times do not hesitate to be aggressive in obtaining advantageous fiscal conditions in Africa or guarantees of lucrative investments for their companies.

Idriss Linge