Feb. 19, 2023 (GIN) – At the opening of the African Union Summit in Addis Ababa this weekend, U.N. Secretary General Antonio Guterres scolded an “unfair financial system” for denying many African countries the debt relief and concessional financing they need.
 
“Systems and structures, from health and education to social protections, job-creation and gender equality are starved of investment for lack of support,” he said.
 
Developing African countries are often left out when global investment lenders create their financial plans, he stated. “African countries cannot invest in these critical areas and climb the development ladder with one hand tied behind their backs.”
 
Guterres continued: “We need a new debt architecture that provides debt relief and re-structuring to vulnerable countries, including middle-income countries, while providing immediate debt suspension and write-downs to countries in need.”
The U.N. chief accused the international financial system of charging African countries “extortionate” interest rates – which he called “a raw deal.”
He also announced $250 million in crisis funding, including for famine risk on the continent.
Public debt ratios in sub-Saharan Africa are at their highest in more than two decades, the International Monetary Fund said last year. 
 
The coronavirus pandemic pushed many poor countries into debt distress as they were expected to continue servicing their obligations in spite of the massive shock to their finances. 
Governments on the continent, including Ethiopia, sought debt restructuring deals under an IMF program to help them navigate the crisis, but conclusion of the process has been delayed.
Others, which have not sought to restructure their debt, like Kenya, have seen their debt sustainability indicators worsen after the pandemic hit their finances.
“Nearly all of us want to put our economies back on a growth trajectory but this will not happen without sufficient restructuring to make our external debt sustainable,” said Ethiopia’s Prime Minister Abiy Ahmed.
Meanwhile, the U.N. will spend $250 million from its emergency fund, the largest ever allocation, to respond to several crises around the world, including helping communities at risk of famine in Africa, Guterres later told a news briefing.