G20 Africa Expert Panel proposes fresh debt-refinancing initiative for low-income countries

The G20 Africa Expert Panel has proposed a fresh debt-refinancing initiative for low-income countries where debt repayments threaten to undo development progress.

Many countries, including some on the African continent, anticipate a peak in their current debt obligations over the next five years. This pressure is now causing a development crisis.

The proposal for a debt-refinancing initiative is part of recommendations in the Africa Expert Panel Report, which was chaired by former Finance Minister Trevor Manuel.

Unlike the Debt Service Suspension Initiative, this proposal would focus on refinancing rather than rescheduling debt obligations. The Africa Expert Panel says its implementation could take several forms, including creating a funding body like the Jubilee Fund or using concessional resources to buy back expensive debt.

South Africa set up the expert panel in a bid to address the debt crisis, especially on the continent.

Chairperson Trevor Manuel provided context for the panel's recommendations:

"Part of the recommendations of the panel would be that you can set up a system that allows countries to apply for a special fund created from this gold just sitting in the vault of the IMF to deal with the development needs of the world and we would put it to far better use."

President Cyril Ramaphosa received the report from the expert panel on Tuesday. He commented on the potential source of funding:

"It’s good to hear Trevor say there’s a hoard of gold in the IMF, which they acquired at $50 an ounce, with the price of gold being $4,000; that means it’s a lot of money."

The report outlines that countries might be hesitant to participate, but argues that the fiscal space created and the fact that the refinancing offer would target countries that borrowed little from private creditors would make participation appealing.