3. The view from Sub-Saharan Africa

loans to help countries’ efforts to mitigate the macroeconomic effects of the pandemic through its rapid credit facilities. While this IMF support (received by 86 countries) is significant, it is less than the amount the fund lent in the year to September 2009 during the global financial crisis. Some countries have been reluctant to turn to the IMF, given the political stigma entailed, while others are ineligible because their debts are deemed unsustainable.29

Both the IMF and G20 have also provided some debt relief. The IMF’s Catastrophe Containment and Relief Trust Fund (CCRT) has made grants to cover debt service payments for 29 of the world’s poorest countries worth USD726.75 million.30 The G20 has also provided temporary debt relief covering bilateral loans to 46 countries through its Debt Service Suspension Initiative (DSSI). While important, many experts have criticised these programmes for not going far enough and for failing to deal with long-term issues of debt sustainability. They cover only a fraction of the debt of a fraction of the countries in need, leaving out middle-income countries, many of which are at the epicentre of the pandemic. The programmes, in fact, are not debt cancellation. The CCRT covered debt service payments until April 2020. The DSSI only defers debt payments to the end of 2021, rather than actually reducing debt burdens. Furthermore, neither programme includes a mechanism to force private creditors to participate in debt relief.

The rhetoric of the IMF, World Bank and other IFIs has changed in recent years and particularly during the pandemic. Calls for across the board fiscal austerity have been replaced by recognition of the need for more fiscal stimulus and tolerance of rising debt levels in the short term. But as the ITUC and many other commentators have pointed

29 https://www.economist.com/finance-and-economics/2021/04/03/how-has-the-imf-fared-during-the-pandemic out, the IMF is applying a double standard.31 Countries in the Global North with fiscal space are being encouraged to spend, while the rest of the world is expected to engage in fiscal tightening in the coming months and years. Rather than a change of principles, debt relief programmes have come out of the necessity of avoiding a global debt crisis. The underlying assumptions that governments in the Global South should deregulate their public sector, infrastructure and labour markets to foster private investment, are also firmly intact.

What does this mean for countries in the Global South and their LPT systems? Analysis of IMF staff reports for 80 countries receiving rapid financing conducted by the European Network on Debt and Development (EURODAD) finds that the plans for cuts to public spending and other austerity measures for the years 2021-23 included in these plans average 3.8 percent of GDP, well above what many of the countries surveyed have spent on their Covid-19 response. Austerity measures are designed to free up resources to stabilise debt levels and meet debt servicing obligations. The study found, however, that 55 countries will have to pay additional annual debt servicing costs equivalent to their 2020 Covid-19 response packages in the future, leaving very little room for public investment in the post-pandemic recovery.32 The World Bank’s continued promotion of PPPs and private involvement in infrastructure, including LPT, is discussed in Section VI.

3.

THE VIEW FROM SUB-SAHARAN AFRICA Africa will be the continent most negatively affected by the underlying inequalities and additional challenges created by the pandemic. Despite Sub-Saharan Africa having only three percent of the world’s confirmed Covid-19 cases and deaths (while accounting for 14 percent of the world’s population), the

31 https://thenextrecession.wordpress.com/2021/04/15/imf-anddebt-a-new-consensus/