Virus Finance Accelerates With African Nations Near Deals

(Bloomberg) --

Measures to help some of the world’s poorest nations fight the coronavirus pandemic accelerated with the prospect of new cash from official creditors and the approval of loan-payment suspensions, while private creditors were still assessing ways to contribute.

The Paris Club signed off on debt waivers for four nations, including Mali and Nepal, with six further moratorium deals likely in the coming days with larger economies. Those may include Pakistan, Ethiopia, the Democratic Republic of Congo and Cameroon, according to a person familiar with the talks.

International organizations continued to disperse funds as part of emergency lending plans, with Kenya set to receive $1 billion from the World Bank. Uganda said it was seeking a total of $300 million from the lender.

Efforts to reduce the burden from commercial debt, including Eurobonds, have proved to be more difficult due to legal complexities and the risk of triggering default. African governments have vowed to continue paying obligations during negotiations with creditors. World Bank President David Malpass said he was frustrated by the slow pace of talks.

Key Developments:

• The Paris Club expects to sign debt moratoriums with Pakistan and Ethiopia, according to a person familiar with the negotiations. In the coming days the group will also finalize debt-moratorium agreements with the Democratic Republic of Congo, Mauritania, Cameroon and the Republic of Congo.
• Finance ministers agree after meeting with so-called Africa Private Creditor Working Group on importance of remaining up to date on Eurobond coupon payments to maintain access to international debt markets after coronavirus pandemic eases.
• China, Africa’s largest bilateral creditor, is likely to agree to delay but not forgive its $152 billion of loans, an approach at odds with prior forbearance plans from groups including the Paris Club, according to a top Johns Hopkins University researcher.

Earlier:

• The world’s wealthiest economies may need to pardon the debts of some low-income nations and help rework the obligations of larger developing countries if the coronavirus pandemic ravages their finances, according to the chair of the Paris Club.
• A debt standstill backed by the G-20 group of nations is unlikely to ease the significant credit challenges caused by the coronavirus pandemic in frontier markets, particularly in Africa, according to Moody’s Investors Service.

Read More:

• Private Creditors Form Group to Negotiate Africa Debt Relief
• Debt-Relief Stigma Risks Hurting, Not Aiding Neediest Nations
• Just 73 Countries Are Eligible for the G-20’s Debt Pause: Map
• Why There’s a Looming Debt Crisis in Emerging Markets: QuickTake
• Investors Spell Out Hurdles to Achieving Global Debt Relief Plan
• G-20 Backs Temporary Debt Relief for World’s Poorest Nations

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