15 years after the historic Gleneagles agreement, burgeoning debt remains one of the biggest barriers to progress in developing countries as they seek to tackle COVID-19 and rebuild after the pandemic. Is it time to think the unthinkable and come up with new solutions to tackle the debt crisis?
15 years ago at the historic Gleneagles summit, G8 leaders agreed to cancel 100% of the multilateral debt owed by the world’s poorest countries, to double aid to Africa, increase health financing, and support African countries’ commitments to provide free universal primary education by 2015. These commitments sought to tackle constraints to growth, which kept African economies and societies from prospering. While not all of the Gleneagles commitments were met, many African countries have been among the fastest-growing economies over the past decade. Debt relief has played a huge role in freeing up resources to invest in human capital.
However, African countries are facing an unprecedented crisis as a result of COVID-19. Governments are facing huge budget shortfalls due to the economic slowdown, a dramatic drop in commodity prices, falling remittances, and flight of foreign capital. Poverty is set to rise due to loss of jobs and incomes from lockdowns and the economic recession. Countries need a massive injection of liquidity to keep economies afloat, tackle the emergency COVID-19 response, and provide social safety nets for the most vulnerable. It is clear that what has worked in 2015 on debt needs updating for 2020.
The Financial Times, in partnership with the ONE campaign, are delighted to facilitate this critical discussion exploring the future of African debt in the COVID-19 response and beyond. Leveraging the spirit and ambition behind the Gleneagles agreement, the panel will renew the conversation on debt and propose practical solutions to the pressing challenges facing African economies.