France, African leaders push to redirect $100 bln in IMF SDR reserves by October

French President Emmanuel Macron said on Tuesday that the Paris summit for African funding had agreed to work to persuade rich countries to reallocate IMF special drawing rights reserves to African countries by October.

Poor African economies must not lag behind in the post-pandemic economic recovery and a significant financial package is needed to provide much-needed economic stimulus, African and European leaders concluded at a summit in Paris.

In the near future, this means accelerating the introduction of the COVID-19 vaccine and creating a fiscal room for African countries, which will face a cost deficit of about $ 285 billion over the next two years, the summit said.

The communiqué sets out a bilateral response based on tackling funding needs to support sustainable, environmental recovery and the basis for private sector-led growth, but it does not affect specific commitments.

“This is a new beginning, a new agreement for Africa,” Senegalese President Mackie Sal told reporters.

The head of the International Monetary Fund (IMF), Kristalina Georgieva, said it was time to stop “the dangerous mismatch between advanced economies and developing countries, especially (c) Africa”.

Georgieva said that the economic production of the African continent will increase by only 3.2% in 2021, compared to 6% in the rest of the world.

Central to the negotiations was the question of how to redistribute the IMF’s reserves (SDRs), which were destined for developed countries to emerging economies.

French President Emmanuel Macron and his wife Brigitte Macron welcome Angolan President Joao Lourenko, accompanied by his wife Anna Diaz Lourenko, to a dinner with leaders of African countries and international organizations on the eve of a summit on aid to Africa at the Elysee Palace in Paris. , France, May 17, 2021. REUTERS / Gonzalo Fuentes

World financial leaders agreed in April to increase the SDR by $ 650 billion and extend the debt service freeze to help developing countries cope with the pandemic, although only $ 34 billion had to be allocated to Africa.

Macron said France had decided to redirect its SDRs and that there was an agreement to try to get rich countries to redistribute $ 100 billion to Africa by October.

“Our job in the next few weeks will be to make the same efforts as France, starting with the United States, and I know all the work we have to do with Congress and the executive, but I’m confident,” he told reporters.

Georgieva promised to come up with a new distribution proposal by August.

“For $ 100 billion, is that enough? Let’s be very clear, it’s not enough. We have a financial difference just to catch up with COVID’s $ 285 billion impact on Africa,” she said. really a situation with hands on deck. “

“We need to get the private sector involved to enter a risky environment through non-risky investments.”

The summit was part of Macron’s efforts to rework France’s commitment to Africa, where it was once a colonial power, at a time when the continent is facing a nearly $ 300 billion deficit by the end of 2023 as it tries to recover. from the decline.

The African Development Bank estimates that up to 39 million people could fall into poverty this year, with many African countries at risk of debt due to the pandemic.

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