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Vera Songwe on Chinese Debt Relief for Africa: “There’s Still a Lot to be Done”

Executive Secretary of the United Nations Economic Commission for Africa, Vera Songwe, joined Masood Ahmed, president of the Washington, D.C.-based think tank Center for Global Development, in an online discussion last week where she provided an update on the status of the ongoing debt relief process and specifically how African countries are engaging the Chinese government as part of the G20’s Debt Service Suspension Initiative (DSSI).

Key Highlights of Vera Songwe’s Interview About African Debt Relief

  • [28:03] HOW ARE THINGS PROCEEDING WITH THE CHINESE?: “I think, unfortunately, of the 9 countries that have finalized the Debt Service Suspension Initiative (DSSI) process not one of them has China included which means essentially China is not participating in the DSSI. We’re reached out to the Chinese government and to the Ministry of Finance to say, you know, can we support a process of education and facilitation of the process. “I think what we’re now trying to do is to understand whether each country almost needs to go to (China) Exim Bank, China Development Bank in an almost individual process because apparently each of these agencies has a different set of agreements and we had thought maybe we could say that every agreement that had a government guarantee was then backed by the state and [inaudible] on the public sector DSSI, it doesn’t seem to be that straightforward.”
  • [30:47] WHAT’S GOING ON WITH THE PRIVATE SECTOR? “I think there has been over the past six weeks a lot of confusion about whether or not we wanted a (debt repayment) standstill from the private sector… we don’t want a moratorium, we want a financial instrument that will allow us to honor every obligation that we have with private creditors but at the same time generate some more liquidity for the countries because that’s essentially what the public DSSI does — it gives countries liquidity for 18 months, we hope. “I think that is the right approach. I am convinced, I know there is no appetite on the continent for any kind of moratorium on the private creditors side. I don’t think the private creditors, either, have any appetite for any kind of moratorium and I think the ratings agencies, for sure, are looking for any kind of default, any kind of conversation around suspension and these countries will be downgraded severely. And let’s remember we’re not talking about a downgrade from A+ to BBB, we’re talking about shutting (their) access to (bond) markets.”

Watch the full interview with Vera Songwe on the CGD’s YouTube channel.

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