The IMF has not yet announced that any country will qualify for debt cancellation, but the JDC said there were examples of countries – such as copper-rich Zambia and oil-exporting Chad – facing severe problems.
The leading ratings agencies have started to flag up the problems that Covid-19 will pose to Africa.
Standard & Poor said around half the 54 countries in the world’s poorest continent had confirmed cases of the coronavirus and warned that Africa could find itself among the regions hardest hit.
An S&P report said African economies and the banking sector were particularly vulnerable to the spread of Covid-19 because of the region’s weak public health systems and reliance on commodity exports, tourism, and remittances sent home from abroad. It also highlighted high levels of foreign debt and the low creditworthiness of most African countries.
“The pronounced deterioration of financing conditions could hurt African countries with a high current account deficit and dependence on external capital flows for financing,” said S&P global ratings credit analyst Mohamed Damak.
Interest rates had spiked on average by 3.5 percentage points for low- and middle-income countries since the mid-February and that costs for new borrowing stood at 10%.
At the same time, commodity prices have plunged, with the price of copper down by 21% since the start of 2020, oil 61% lower, and coffee falling by 15%. The Bloomberg commodity price index – which measures a basket of oil, metals and food prices – has dropped 27% since the start of the year and is now at its lowest level since 1986.
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