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Africa Financing Summit: Pledges of $100bn to support continent’s economy

Africa Financing Summit

International donors participating in the Africa Financing Summit in France have pledged more than $100 billion to support the African continent’s economy. The summit aims to support countries hard-hit by the COVID-19 pandemic.

About 30 presidents from different countries of the world, in addition to the heads of international financial institutions such as the IMF, participated in the summit to support the economy of the continent.

Africa Financing Summit

African leaders and heads of multilateral lending institutions met in Paris to find ways to finance the African economies affected by the COVID. They also wanted to discuss addressing the continent’s billions of dollars of debt.

During the summit, they discussed the replenishment of the World Bank’s International Development Association, which provides emergency aid, as well as private sector investments, and instruction on how to tackle debt crisis.

French President Emmanuel Macron invited the leaders of states and governments and heads of international organizations to attend the meeting. Some participated virtually.

On the sidelines of the summit, Macron said that the participating countries will provide about $100 billion in cooperation with the IMF.

He said the international community should aim to vaccinate 40% of the continent’s population by the end of 2021.

Macron added that the percentage of people who received vaccines among the African population is among the lowest rates in various parts of the world, indicating that the continent will need, in his estimate, $285 billion dollars until 2025.

IMF managing director Kristalina Georgieva said that “Growth stability in Africa means prosperity and stability in Europe.”

She said that the economic output of the African continent will rise by only 3.2% in 2021, compared with 6% in the rest of the world.

Drawing rights

She also explained that the special drawing rights in the IMF will be transferred from rich countries to Africa in order to reach financing of $100 billion.

The world’s financial officials agreed last April to increase the Special Drawing Rights of the IMF by $650 billion dollars and extend the freeze on debt service to help developing countries deal with the pandemic, but the allocation to Africa will not exceed $34 billion.

SDRs are international reserve assets that the IMF has created to complement countries’ original reserves.

Macron said that his country is committed to allowing richer countries to redistribute their drawing rights to the poorest countries, especially in Africa, so that the financing available today will shift from $34 billion to $100 billion.

The African Development Bank estimates that up to 39 million people may fall below the poverty line this year. Many African countries at risk of debt due to the pandemic.

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