德国发展研究所-新冠疫情：G20如何应对SSA的债务危机？（英）-2021-15页_439kb

Summary of Policy Brief: COVID-19: HOW CAN THE G20 ADDRESS DEBT DISTRESS IN SSA?

Core Content

This policy brief examines the growing debt distress in Sub-Saharan Africa (SSA) exacerbated by the COVID-19 pandemic and proposes ways in which the G20 can support SSA in addressing this crisis. The focus is on short-term and long-term financial solutions, transparency in debt management, and reforms in rating agencies to ensure fair and sustainable debt treatment.

Main Challenges

• Rising Debt Levels: SSA's government debt as a share of GDP increased from 34.5% in 2010–2017 to 51.5% in 2019, and further to 57.8% in 2020. Official external debt also rose from 15% to 23.6% during the same period.
• Debt Structure Shift: There has been a shift from concessional to non-concessional financing, including private credit such as Eurobond issuance, which has led to higher interest rates and increased debt service payments.
• Infrastructure Needs: The African Development Bank (AfDB) estimates that annual infrastructure financing in SSA is needed at around US$130 to US$170 billion.
• Funding Shortfall: To achieve growth between 2020 and 2023, SSA faces a funding shortfall of about US$890 billion.
• Debt Distress Risk: Many SSA countries are at high risk of or already in debt distress, with debt service to revenue ratios rising significantly due to the pandemic.

Key Proposals

1. Operationalising the Common Framework for Debt Treatments Beyond DSSI

• The G20 should enhance private sector involvement in the Common Framework to ensure broader participation and more effective debt restructuring.
• The G20 should mandate full transparency by requiring complete disclosure of outstanding debt in beneficiary countries as a condition for debt treatment.
• The G20 should explore options to include non-DSSI eligible countries in the Common Framework to address region-wide vulnerabilities.
• Financial resources released should be directed towards investments in Sustainable Development Goals (SDGs), especially green projects.

2. Special Replenishment of Concessional Windows and SDR Allocation

• The G20 should support a robust and accelerated replenishment of the International Development Association (IDA) and the African Development Fund (ADF).
• A new allocation of Special Drawing Rights (SDRs) should be directed to low-income countries (LICs), with a focus on redistributive allocation beyond their quotas.
• The G20 should facilitate the recycling of SDRs to LICs through mechanisms like the Poverty Reduction and Growth Trust (PRGT), managed by the IMF.
• The G20 should ensure that SDR allocations are transparent and accountable, with enhanced oversight and monitoring.

3. Internal Resource Mobilisation and Public Financial Management

• G20 countries should support capacity building for domestic resource mobilisation in LICs, including strengthening financial sectors and public financial management systems.
• Efforts should be made to improve tax collection efficiency and promote local currency bond markets to reduce reliance on external borrowing.
• The G20 should assist LICs in curbing illicit financial flows (IFFs) by supporting the development of a global legal framework for asset recovery.
• Investments in digitalisation are crucial for improving resource mobilisation and reducing corruption.

4. Reforming Rating Agencies

• Rating agencies often assign unfavourable ratings to SSA countries, which increase borrowing costs and limit access to financial markets.
• These ratings do not fully reflect Africa's potential, including demographic dividends and resource endowments.
• Rating agencies should incorporate long-term, SDG-aligned indicators and focus on recovery probabilities rather than just debt metrics.
• The G20 should develop a set of critical, comparable indicators for rating agencies that account for changing risk profiles over time.

Policy Recommendations for the G20

• Common Framework for Debt Treatments Beyond DSSI:

  • Enhance private sector involvement.
  • Mandate full transparency in debt reporting.
  • Include non-DSSI eligible countries.
  • Ensure resources are used for SDG-related investments.

• International Financial Institutions:

  • Support accelerated replenishment of IDA and ADF.
  • Facilitate redistributive SDR allocation to LICs.
  • Encourage SDR recycling through PRGT and similar mechanisms.
  • Ensure transparency and accountability in the use of SDRs.

• Internal Resource Mobilisation and Public Financial Management:

  • Promote capacity building in public finance and tax collection.
  • Encourage the development of digital financial systems.
  • Assist in curbing IFFs and supporting asset recovery.

• Rating Agencies:

  • Develop and implement long-term, SDG-aligned indicators.
  • Shift focus from debt indicators to recovery probability.
  • Ensure that ratings reflect country-specific circumstances rather than applying a one-size-fits-all approach.

Conclusion

The G20 has a critical role to play in addressing the debt crisis in SSA. By operationalising the Common Framework, supporting concessional financing, promoting internal resource mobilisation, and reforming rating agencies, the G20 can help SSA countries achieve sustainable development and manage their debt challenges effectively. These actions are essential for ensuring that financial resources are used efficiently and equitably to support the region's recovery and long-term growth.