The Maryknoll Office for Global Concerns signed the following letter to Secretary Mnuchin urging him to support debt cancellation and the use of Special Drawing Rights by the International Monetary Fund to help developing countries, particularly in Africa, manage the COVID-19 crisis.
September 16, 2020
Dear Secretary Mnuchin,
We, the undersigned organizations concerned about Africa in collaboration with the Advocacy Network for Africa, urge you to support Special Drawing Rights at the International Monetary Fund (IMF) and debt cancelation for countries struggling to respond to the COVID-19 pandemic. As organizations working throughout Africa, we are deeply concerned about the coronavirus’s impact on the continent and urge you to move quickly to prevent further devastation and loss of life.
Although African countries have recorded fewer cases than the US, they face unique challenges given their minimal resources, inadequate health systems, and medical personnel, and acute shortages of basic essential services like reliable water and electricity. Massive and crowded informal settlements, internally displaced peoples, and people in refugee camps remain vulnerable to the coronavirus.
Without financial support from the US and the international community, COVID-19 can easily overwhelm these countries. Some of them are already struggling with the rising numbers and cannot provide testing, contact tracing, and support for social distancing for low-income families. In the last month, COVID-19 infections have doubled as the continent passes 1 million reported COVID-19 infections, while the lack of testing kits or capacity to conduct contact tracing prevents local and international stakeholders from knowing the exact number of infections. Additionally, the lack of Personal Protective Equipment is hampering the crucial work of saving lives.
Additionally, the economic downturn caused by COVID-19 is projected to cut Africa’s economic growth by at least half. The COVID-19 pandemic has caused high unemployment numbers, destroying the tourist industries and agricultural export on which most African countries rely. Through no fault of their own these countries are hit by a shock that will devastate their economies, wiping out years of progress on growth, development, and poverty reduction.
To prevent cascading crises on the continent, we call upon the Department of Treasury to prioritize the following:
Issuance of Special Drawing Rights
The seriousness of the current crisis warrants an issuance of at least two trillion Special Drawing Rights (SDRs) from the IMF. SDRs are essentially the Fund’s reserve currency, to be made available in times of economic crisis or downturn (as they were last used in a major allocation, in
2009). In this scenario of prolonged uncertainty, they are a speedy way to enable countries to boost reserves and stabilize economies, helping minimize other economic losses, without any cost to the US government. They also provide much needed foreign exchange resources to countries whose capacity to earn them through trade and remittances will remain severely constrained in the short to medium term. Exports from developing countries are expected to shrink by at least 20 percent this year, four times the reduction in the wake of the 2009 Global Financial Crisis. In addition to new issuance, adopting a mechanism to facilitate advanced economies using their SDRs to support low-income countries would increase the benefit for the countries that need these resources the most.
The World Food Program has estimated that the number of people facing acute hunger will double this year, from 135 million to 265 million, because of the deep world recession. Without additional resources, millions of lives will be in jeopardy. These resources from the IMF are not loans, no one has to pay them back, but they will help save lives by assisting countries to avoid worsening economic crises and having the resources to stop or slow the spread of COVID-19.
Debt Relief and Debt Cancellation
We welcome current global initiatives to address the impact of debt in this crisis, including the G20’s Debt Service Suspension Initiative (DSSI). Forty-two countries have requested a suspension of payments under this initiative, amounting to US $5.3 billion of debt payments deferred. However, this is nowhere near enough to enable the most impoverished nations to mount an effective response to the pandemic and embark on a just recovery. The United States, the G20, and the global community must take much bolder steps, such as extending the debt service expansion to two years and total debt cancelation for highly indebted low-income African countries.
We urge the Trump administration to press the G20 to go beyond its currently agreed debt payment suspension measures by extending the suspension to 2021 and permanently waiving payments due during this period. Furthermore, the G20 should set up a process for orderly restructuring all countries’ external sovereign debt that needs such relief to respond to or recover from the COVID-19 pandemic. This process should build upon longer-term debt sustainability discussions, with robust human rights impact assessments designed to ensure that all are guaranteed economic and social rights. At a minimum, this should include the 77 poorest countries. Debt cancellation should be accompanied by robust transparency and accountability mechanisms at the national level to ensure that money freed up is not lost to corruption or wasteful expenditure. We urge you to take the necessary steps to ensure that this can be done as soon as possible and that the G20 Action Plan is updated accordingly.
Thank you for your swift attention to these requests – our actions over the next few months will have a tremendous impact on people’s wellbeing across the African continent for years to come.
Advocacy Network for Africa
Africa Faith and Justice Network
Africans Rising for Justice, Peace, and Dignity
Africa World Now Project
American Friends Service Committee
Association of Concerned Africa Scholars (USA)
Bread for the World
Brooklyn For Peace
Center for International Policy
Chicago Area Peace Action
Chicago Religious Leadership Network on Latin America
Church of the Brethren, Office of Peacebuilding and Policy
Church World Service
Demand Progress Education Fund
Environmentalists Against War
Friends Committee on National Legislation
Friends of Angola
Future African Leaders Project
Give Them A Hand Foundation
Iowa Interfaith Power & Light
Justice Is Global
Maryknoll Office for Global Concerns
Mennonite Central Committee U.S. Washington Office
National Advocacy Center of the Sisters of the Good Shepherd
North American Somali Women’s Association
Our Lady of Charity of the Good Shepard, U.S. Provinces
Pax Christi, USA
Peace Action New York State
Presbyterian Church (U.S.A.)
STAND: The Student-Led Movement to End Mass Atrocities
The Oasis Network for Community Transformation
United African Congress
United Methodist Church – General Board of Church and Society
Torture Abolition And Survivors Support Coalition International
United Church of Christ, Justice and Witness Ministries
Watch Democracy Grow
Photo, U.S. Department of the Treasury, available on Flickr.