UN Secretary-General Antonio Guterres has criticized the international financial system for denying African counties debt relief while charging them “extortionate” interest rates.
Speaking at the opening ceremony of the annual African Union summit in Ethiopia on Saturday, Guterres called for far-reaching reforms to the structure of international finance to serve the needs of developing countries more efficiently.
“The global financial system routinely denies (developing countries) debt relief and concessional financing while charging extortionate interest rates,” he said.
According to the International Monetary Fund (IMF), public debt ratios in sub-Saharan Africa are at their highest in more than two decades.
The African governments, including the government in Ethiopia, sought debt restructuring deals under an IMF program to help them navigate the crisis, but the conclusion of the process has been delayed.
Other states, such as Kenya, which have not sought a debt restructuring process, have seen their debt sustainability indicators worsen after the pandemic hit their finances.
“African countries cannot… climb the development ladder with one hand tied behind their backs,” Guterres said.
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Guterres also announced $250 million — the largest ever allocation — in crisis funding, including for famine risk in Africa.
He said that the world body will spend the money from its emergency fund to respond to several crises around the world, including helping communities at risk of famine in Africa.
The summit, which brings together leaders from the 55 African nations, is also focusing on deepening food and security crises on the continent.
Hunger, driven by the impact of the armed conflicts and also extreme weather that scientists have linked to climate change, has also worsened in several nations.
Amongst the nations, Somalia is on the verge of famine after five failed rainy seasons, with hundreds of thousands of people suffering catastrophic food shortages.
