African finance ministers made a plea for assistance and “common humanity” in their struggle against an extreme budget crunch brought on by errors that their leaders blame on wealthier nations and that the Israel-Hamas conflict may now exacerbate.
According to Egyptian Finance Minister Mohamed Maait, poor countries on both sides were impacted by rising interest rates and soaring inflation following the US and Europe’s trillion-dollar expenditures during the pandemic.
“We have to bear the expense,” he declared on Saturday in Marrakech, Morocco, during a gathering held in conjunction with the World Bank and International Monetary Fund annual meetings. “With the war, we experience extremely difficult pain.”
One of the main concerns throughout the meetings has been the possible threat to the world economy posed by an intensifying Middle East conflict, as well as the implications for underdeveloped countries currently facing financial difficulties. For the first time since 1973, the conference is taking place in Africa.
A cost of living problem has been brought on by rising food prices in Africa following Russia’s invasion of Ukraine, and high borrowing costs are increasing the likelihood of default.
Zambia finalised a $6.3 billion agreement struck nearly four months ago when it announced on Saturday that it had accepted a memorandum of understanding to restructure its loans with its creditors, led by China and France.
According to persons familiar with the discussions, Egypt is in talks with the IMF to increase the size of its bailout programme from $3 billion to around $5 billion.
Maait announced on Saturday that it “went east” in search of reasonably priced loans and that it will issue a panda bond the next week due to the rising cost of capital in the western markets.
“The challenges we face are represented by the issues of high debt, high debt financing, and low liquidity,” he said at an event organised by the Policy Centre for the New South and the African Centre for Economic Transformation. “The rating agencies are unforgiving of our predicament.”
One of the main topics of the talks has been bolstering the capabilities of the lenders located in Washington to enable them to significantly enhance the amount of cash they can offer the area.
But according to Ghana’s finance minister, that needs the backing of significant shareholders, and thus far, that support hasn’t materialised due to a lack of political will.
“You may be wondering, where are the former leaders now? The Mandelas and the FDRs,” Ghana’s Finance Minister Ken Ofori-Atta remarked. “It concerns the state of our shared humanity.”