Despite shrinking economies and plunging tax revenues as a result of the pandemic, governments on the continent have ramped up spending on curbing the spread of Covid-19 and decrease deaths. With economic activity in the sub-Saharan region expected to contract by 2.8% in 2020, according to the latest data by the World Bank, being able to temporarily stop payments to creditors would free up much needed funds to combat the virus.
The IIF says these countries also owe $11-billion to bilateral creditors and an additional $7-billion to multilateral lenders. While negotiations with countries and the Paris Club continue, only a few of the eligible poorest nations have so far opted to accept the debt relief.
The funds are negotiated on a country-by-country basis. Conditions for the release of the funds from the World Bank and IMF are based on criteria such as transparency when procuring services and goods.