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Minister of Finance, Mr. Ken Ofori-Atta
Finance Minister Ken Ofori-Atta has called for debt forgiveness and cancellation for the world’s most vulnerable and debt-burdened countries.
Ofori-Atta said countries needed the gesture to help them empower them financially so they can protect lives and rescue their economies from the impact of the devastating coronavirus (COVID-19) pandemic.
He made the call in a virtual plenary session of the Development Committee (DC) of the World Bank (WB) and International Monetary Fund (IMF) last Friday.
The minister also used his latest assignment as DC chair to call for an extension of the Debt Service Suspension Initiative (DSSI) introduced by the G20 for vulnerable countries.
Fiscal space
The minister said the COVID-19 crisis threatened to reverse years of development progress and throw hundreds of millions of people into poverty.
While noting that the introduction of DSSI for developing countries was essential “to give fiscal space to economies,” he said that much remained to be done to help strengthen countries’ capacity to contain the far-reaching effects of the pandemic. in lives and economies. .
“Since its approval, many of the poorest countries have worked closely with official bilateral creditors.”
“The moratorium has been a critical liquidity intervention to save much-needed resources to address the crisis before us,” he said, but suggested that the initiative be extended for two years and reexamined so that it can better benefit more countries.
Private creditors
While praising the G20 for introducing the initiative, Mr. Ofori-Atta said that China and private creditors from vulnerable countries should join the initiative.
Furthermore, in the spirit of comparable treatment of all creditors and to ensure universal participation, China and private sector creditors should specifically involve Africa, in particular, in a debt restructuring program and eventually there should be debt forgiveness and cancellation for vulnerable people and debt distressed countries, ”he said.
He also asked for a special secretariat to work on establishing what he described as a new global and “fit for purpose” financial architecture, as was done at Bretton Woods. “
Essence of DSSI
Ofori-Atta’s call comes at a time when the G20 had agreed to extend the DSSI for six months.
The initiative was introduced earlier this year in response to the ravages of the COVID-19 pandemic on the economies of the developing world.
It allows eligible countries to suspend principal or interest payments on official bilateral debt from May 1 to June 2021, thus creating fiscal space for beneficiary countries to reallocate resources in critical sectors such as protecting lives against the pandemic, improving national virus response programs and supporting businesses to survive.
According to the WB, of the 73 eligible countries at the time the DSSI program was announced, 38, including Ghana, were in sub-Saharan Africa.
Although Ghana has shown no interest in the initiative, the WB said in April that the country could earn $ 354.1 million, equivalent to 0.5 percent of gross domestic product (GDP), from DSSI.
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