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International Monetary Fund Must Tie Debt Cancellation to Transparency Measures

On April 13, 2020, in a press statement, the International Monetary Fund (IMF) announced that its “Executive Board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust as part of the Fund’s response to help address the impact of the COVID-19 pandemic.” Africa Faith and Justice Network (AFJN), one of the many organizations that have been calling for debt cancellation for developing countries, welcomes the news as it open up immediate recourses for those countries to receive “vital emergency medical and other relief.”

COVID-19 has provided an opportunity to advance a long overdue policy in favor of developing countries because many of these countries live in constant crisis mode. Even in critical times like this however, we must not lose sight of why these countries are struggling and how they got to that point. It is imperative to ask: how did these countries got into debt? What did these countries do with the loan they took? Look no further than the salaries, lifestyle, and benefits of these underperforming leaders and who they have excluded from benefiting public funds.

Debt cancellation or relief must not become another opportunity for unaccountable leaders to have more money to satisfy their ill habits of embezzling public funds for themselves.

For any meaningful impact from debt cancellation or relief, the IMF must tie it to very strong derivable transparency and accountability measures. Debt cancelation or relief must not become another opportunity for unaccountable leaders to have more money to satisfy their ill habits of embezzling public funds for themselves.

In an interview granted to AFJN on April 14, 2020, Florentin Mokonda Bonza, Economics Science Professor at the University of Kinshasa and one of DRC’s politicians said that “It is normal that developing countries, in particular those on the African continent, sidelined on the world trade and depending only on raw material export whose prices recorded an unprecedented fall, need an oxygen tank to breathe. This six-month suspension of debt service could free up resources to meet the overwhelming expenses necessary to fight the pandemic. It goes without saying that if politicians do not change their selfish behavior, it will be difficult to design and implement public policies that meet the economic and social concerns of African populations.”

“If politicians do not change their selfish behavior, it will be difficult to design and implement public policies that meet the economic and social concerns of African populations.”

Florentin Mokonda Bonza

AFJN continues to advocate for debt relief for African countries and hopes that the IMF and other financial institutions will evaluate the eligibility of many more countries and reach out to them. While AFJN continues to call for enforcing transparency and accountability on borrowing countries, we equally call on the lending financial institutions to assess their lending policies, some of which have contributed to pushing vulnerable countries further into debt cycle and poverty. Such assessment is the right thing to do. It is a moral issue.

Read the full press statement from the IMF.

by Ntama Bahati, AFJN Policy Analyst

Source: www.afjn.org