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The Next Steps in Dealing with Africa’s Debt Burdens

To date, 28 countries, including 20 in sub-Saharan Africa, are benefitting from the Debt Service Suspension Initiative (DSSI) set up by the Paris Club, for a cumulative amount of $2.1bn, and 11 other applications are still being processed,” said the president of the informal organisation, Odile Renaud-Basso, director of the French Treasury. The debt payment moratorium measures only run until the end of the year 2020. As the deadline approaches, policy-makers are wondering about the future of these measures. The institution says this measure will be decided on a “case-by-case” basis and will depend on three conditions being met: that debt levels remain sustainable, that the forgiveness is accompanied by an IMF programme and, finally, that the private sector participates in the effort. Between now and the second half of the year or the end of 2021 – depending on the duration of the extension that will be decided for the repayment moratorium – the governments eligible for renegotiation will have to decide whether they wish to benefit from this breath of fresh air for their finances, bearing in mind that private-sector participation will almost automatically lead to a downgrading of their sovereign ratings.