MEFMI creates awareness on debt restructuring options

Governments in developing countries, including those in the MEFMI region, continue to face mounting debt service pressures as a result of the COVID-19 pandemic.  The pandemic has led to reduced capacity to repay public debt due to the declining domestic revenues induced by subdued economic activity and decreasing proceeds from commodity exports arising from the significant drop in prices. On the other hand, increased government spending on health and social protection services in response to emergency needs has led to higher financing needs. In the absence of sufficient concessional financing, these developments may necessitate debt restructuring.

As part of its activities to help member countries navigate through the crisis, MEFMI hosted a webinar on 24 September 2020 to discuss opportunities available to developing countries on debt restructuring during both the crisis containment phase and thereafter. The webinar also discussed challenges faced by countries and the types of support available from institutions such as the African Legal Support Facility (ALSF) to help them go through complex debt restructuring negotiations.

A total of 93 people from 18 countries, including 11 MEFMI member countries, registered for the webinar, and 52 participated in the live event. The majority of the participants were from institutions in MEFMI member countries, while others were from technical cooperating partners, civil society, academia and independent consultants. The webinar was facilitated by three (3) resource persons, comprising Dr. Thomas Wyatt Laryea (International Law and Policy Expert from Orrick, Herrington & Sutcliffe LLP), Ms. Oluwatoyin Beatrice Ojo (Senior Legal Counsel and Business Development Officer from ALSF), and Mr. Andrew Bvumbe (Director of the Public Debt Management Office, Ministry of Finance and Economic Development, Zimbabwe).

The webinar enhanced knowledge of participants on options available internationally for low-income countries on debt restructuring during the COVID-19 crisis. The event provided an opportunity for participants to learn from the experience of ALSF in supporting African countries, and how governments should address internal and external challenges in order to benefit from the various debt restructuring mechanisms. Participants also learned from the experience of Zimbabwe on managing and servicing external debt in the face of increased financing needs to respond to fiscal pressures imposed by the pandemic.

As a way forward, MEFMI will continue engaging member countries and provide technical assistance in the area of debt restructuring during the COVID-19 pandemic and thereafter.

By: Cristina Dimande