Lack of Progress in G-20 Debt Deals a Deterrent for Mauritania
Lack of Progress in G-20 Debt Deals a Deterrent for Mauritania
(Bloomberg) -- Mauritania is hesitating to participate in a debt-relief plan set up by the world’s leading economies to help poor nations in the wake of the pandemic.
The West African economy is still studying the Group of 20 Common Framework, which requires debtors to ask bankers and bondholders for the same relief granted by government lenders, six months after saying it was considering it as an option to manage external debt of about $4.5 billion.
“In principle, the prerequisites of the Common Framework are attractive,” Mauritania’s Economy Minister Ousmane Mamoudou Kane said by phone from Paris. “We need to better understand what to expect from the framework and to see what the successful examples are.”
There are no such examples just yet. Of the 73 eligible countries, only three -- Chad, Ethiopia and Zambia -- have said they’ll participate and progress has been slow.
Ethiopia’s creditors held a second meeting last month even as an internal conflict escalates, spooking investors. Zambia, which already defaulted on its loans, is still working to form a committee. Chad, which reached a deal with its official creditors earlier this year, hasn’t been able to come to an agreement with its biggest private lender, Glencore Plc.
Mauritania, which has no private creditors and little debt exposure to G-20 countries, expressed interest in the framework in May. The iron ore producer has already benefited from an International Monetary Fund allocation of $129 million in reserve assets, known as special drawing rights, which it used to fund its budget. Another G-20-led program helped the country delay payments of more than $200 million to creditors.
“We’re still deciding,” whether to apply for the Common Framework, said Kane. “If we were convinced, we would’ve already signed up.”
Mauritanian President Mohamed Ould Ghazouani has repeatedly called for debt cancellation for the nations worst-hit by the pandemic. The $8.1 billion economy expects to grow 3.1% in 2021 after contracting 2% last year. The World Bank estimates that 48,000 more Mauritanians were pushed into extreme poverty due to the fallout from the pandemic.
Best Deals
“We’re in a period where we need to invest in human capital,” said Kane. “Education is one of our top priorities. Securing water supply is another.”
Mauritania, made up mostly of desertland, is already in direct talks with China and India after reaching agreements with Kuwait and Saudi Arabia, according to the minister.
Saudi Arabia agreed last month to suspend 30.6 million riyals ($8.2 million) of Mauritania debt payments for 2020 to help the nation deal with the impact of the coronavirus. In August, Kuwait agreed to restructure $82.7 million of debt.
“We’re exploring all options and looking for the best deals possible,” Kane said. “This includes debt cancellation. We don’t exclude anything.”
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