Is sovereign debt impeding Africa’s COVID-19 recovery?

The pandemic accelerated the unequal treatment of Africa, driven by the rules and systems of global economic governance. It exposed the practical implications of inequality – notably differences in state capacity to limit the socio-economic impact of lockdowns – uncovered the hyper-dependence of critical value chains, particularly to China, and revealed both the vulnerabilities of the international financing system and the limits on its coordination.

Some vital issues remain outside the gift of Africa’s leaders and people, notably around debt. Hitherto, lending was governed by the maxim of avoiding adding to already-high debt burdens, ‘you are too indebted; therefore, we will not lend you more’.

But this precautionary principle is not applied even-handedly as central banks of wealthy countries with strong currencies introduced expansive monetary policies they likened to ‘firing a bazooka’. Unorthodox measures now routinely employed by leading economies make a mockery of the traditional IMF macroeconomic conditionality rulebook.

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First published by ACCORD