'Play your part,' Ramaphosa pleads with credit ratings agencies at Paris summit
President Cyril Ramaphosa has pleaded with credit ratings agencies to “play their part”, as many vulnerable countries struggle to recover from the devastating economic impact caused by the coronavirus pandemic.
“Credit ratings agencies need to play their role without acting as a deterrent to countries who seek to take advantage of credible and transparent credit relief measures,” said Ramaphosa on Tuesday.
The president was speaking during the high-level Paris summit on financing African economies. Ramaphosa said the gathering takes place at a critical juncture when the economies of Africa and indeed the entire world are counting the cost of the Covid-19 pandemic, and considering the measures that are urgently needed for a swift recovery.
While counties recover economically, Ramaphosa said: “The most important task at hand is to protect and save lives. We therefore need to ensure that everyone has access to the vaccine in an equitable manner.”
He told President Emmanuel Macron and other world leaders that economies on the African continent have “been particularly hard hit” by the pandemic.
The International Monetary Fund (IMF) estimates that sub-Saharan African economies will grow at 3.4% in 2021 compared to global growth of 6%, said Ramaphosa.
“Though it is expected, this growth will be buoyed by the resumption of international trade, higher commodity prices and a resumption of capital inflows, the recovery will be slow,” he said, adding that after two decades of economic reform, the ability of many countries on the continent to implement macroeconomic policies that support a sustainable recovery is now constrained.
“To boost the prospects for a strong and sustainable recovery, African governments need to mobilise significant additional external financing, with the assistance of the international community.”
He said the World Health Organisation’s Access to Covid-19 Tools Accelerator — known as ACT-A — is a key instrument for achieving this goal.
As the co-chair of the ACT-A, Ramaphosa urged countries to assist in closing the $19bn financing gap for 2021.
In addition, he said SA supported the IMF’s Special Drawing Rights mechanism — which should be allocated without delay — to provide liquidity to the global financial system and to support vulnerable countries.
He said SA and other G20 members have called on the IMF to make a comprehensive proposal for a new SDR general allocation of $650bn to meet long-term global need to supplement reserve assets.
“We are of the view that the IMF must explore options for members to channel SDRs on a voluntary basis to the benefit of vulnerable low and middle income countries. This should be done in parallel with the general allocation and as soon as possible,” said Ramaphosa.
Furthermore, he said, SA supported an ambitious replenishment process of the International Development Association — or IDA-20 — as well as increased levels of official development aid.
“We strongly believe that alternative development financing mechanisms should not be a substitute for official development aid. In this regard we welcome the pipeline of 30 projects amounting to about $2bn for the African continent being prepared under vaccines programmes of the World Bank,” said Ramaphosa.