Corona could cause a humanitarian catastrophe in the poorest countries. The IMF sees the “darkest” hour and mobilizes aid with the World Bank. Will there be a debt moratorium soon?
Dhe coronavirus is already hitting the industrialized world with full force, but a humanitarian catastrophe is looming in developing countries. The poorest countries are not prepared for the crisis, neither their health systems nor their economies. “This is a crisis like no other, the global economy has come to a standstill,” said the Director General of the International Monetary Fund, Kristalina Georgieva, in Geneva. More than 90 countries have applied for financial assistance from the Monetary Fund.
The economies of poor countries are currently registering a capital flight that significantly exceeds the outflows during the financial crisis. According to the Monetary Fund, 90 billion dollars have been transferred from the emerging and developing countries with the aim of investing the money safely. The IMF boss said that some countries were hit hard by the collapse of commodity prices.
But that’s not all: Tourism, which is an important source of foreign currency for Tunisia, Senegal, the Seychelles, Mauritius and Kenya, has collapsed. Kenya also almost no longer exports flowers. African textiles are hardly sold in Europe and other industrialized countries. Nigeria’s oil exports are also badly affected.
“This is the darkest hour of mankind in my lifetime”
A severe recession is looming even in more developed South Africa. The South African rand has lost a lot of value against the dollar. Foreign direct investments in sub-Saharan Africa are likely to fall by at least 15 percent due to the corona crisis, estimates the organization Unctad. Millions of jobs are likely to be lost. There should be a lot more refugees. “This is the darkest hour of mankind in my lifetime,” Georgieva said at a press conference with representatives of the World Health Organization. She called for the protection of the most vulnerable people in poor countries. For them, the classic recommendations to maintain social distance are not practicable, especially not in the crowded urban slums.
The health systems in many poor African countries are already overwhelmed, although the pandemic in the continent is only just beginning. This is illustrated by the example of Nigeria: According to the German economist and Africa specialist Robert Kappel, there are currently 200 employees in six laboratories that can carry out tests in the country with a population of more than 200 million people.
There are only 350 intensive care units in the hospitals, each with a maximum of twenty beds. In Kenya there are 130 intensive care beds and 200 doctors and nurses available. There are an average of two doctors for every 10,000 people in African cities. For comparison: in Italy there are 41.
In addition, many countries in Africa are already struggling with other epidemics, such as yellow fever, malaria, Lassa fever and HIV. The majority of the estimated 15 million HIV patients live in Africa. Around 2.5 million people become infected with tuberculosis every year. Even Ebola has not yet been completely defeated. IMF chief Georgieva pointed out that the monetary fund has financial firepower in the amount of one trillion dollars and is willing to approve the funds in the fight against the crisis. She demanded that ensuring the payment of doctors and nurses, equipping them with protective clothing and setting up emergency hospitals should have top priority.
The IMF budget for emergency aid in the poorest countries has been doubled to $ 100 billion. In addition, some poor countries are exempt from debt service to the monetary fund, rich countries step in for them. Last Friday, the World Bank approved aid projects worth 1.9 billion dollars in 25 poor countries. According to the organization, projects in another 40 countries will be checked quickly. The World Bank expects to invest 160 billion dollars within the next 15 months in the fight against the pandemic and its consequences.
Several Western governments also want to come to the aid of the developing countries. Federal Development Minister Gerd Müller (CSU) has called for a haircut for developing countries. The G-20 countries had previously announced that they would invest a total of 5,000 billion dollars in the global economy. This must include debt relief for the poorest countries, demanded Müller and promised that Germany would also step up its development policy efforts.
France supports the proposal to grant developing countries new special drawing rights of $ 500 billion in the International Monetary Fund, as well as new opportunities for swap deals. A debt moratorium should also be agreed for the poorest countries. The Monetary Fund and the World Bank are also campaigning for a debt moratorium. The Paris Club, where state creditors and debtors come together, should work on the front lines because of its long experience with these issues, said French Minister of Economics and Finance Bruno Le Maire last week. “We have a responsibility to prevent drama in the developing world, especially in Africa,” he said.