Cyril Ramaphosa to address crucial UN meeting on Covid-19 financing
President Cyril Ramaphosa is set to address a UN high-level event which will explore how best to mobilise funds to help developing countries whose challenges have been worsened by the Covid-19 crisis.
The event — which will be jointly hosted by Canadian Prime Minister Justin Trudeau and Jamaican Prime Minister Andrew Holness — is centred on concerns that the UN 17 Sustainable Development Goals may not be achieved if developing countries are not given adequate resources to support their Covid-19 response efforts.
A statement issued by the presidency on Thursday said Ramaphosa — who also serves as the chairperson of the AU — would be participating at the invitation of UN secretary-general António Guterres.
The event will look into issues of global liquidity, debt vulnerability, illicit financial flows, engagements with private sector creditors, the recovery plan and access to external finance, and inclusive growth.
The discussion notes state that actions which will be taken in the short term to mitigate the challenges include special drawing rights, debt sustainability and the management of capital flows.
“The IMF is exploring with its members additional tools that would meet the financing needs, including those that involve SDRs (special drawing rights),” the document reads.
“The IMF and World Bank staff are collaborating on frameworks for monitoring the use of created fiscal space to increase social, health, or economic spending, and for disclosure of public debt according to international standards, with technical assistance being provided as appropriate. Together with the World Bank, the IMF will prepare a paper on DSSI (debt service suspension initiative) for the G20 meeting in June, which will cover any issues impeding the effective implementation of the DSSI, and a report to assess whether an extension of the DSSI is needed by October. In addition, the IMF, with the G20 International Financial Architecture (IFA) and the Paris Club, are stepping up work with official and private creditors to improve international mechanisms for debt resolution.”
About R80bn of the government’s R500bn economic stimulus package — announced by Ramaphosa in April — could be sourced from the IMF's special dispensation for Covid-19.
SA can also access up to R868m from the World Bank, R85bn from the African Development Bank and R43bn from the New Development Bank.
“The IMF is providing policy advice to member countries on managing capital flows, including insights from IMF work on developing an integrated policy framework. Its advice covers a range of policies, including exchange rate adjustment, foreign exchange intervention, monetary policy, as well as sound financial supervision and regulation through macroprudential measures. Temporary use of capital flow management measures on outflows may be needed to prevent full-blown crises, as part of a broader policy package that addresses underlying macroeconomic imbalances.
“The IMF is also reviewing its macroeconomic policy advice on external shocks through its integrated policy framework (IPF) analytical workstream. The IMF will prepare a paper on the IPF likely by end of summer. The paper will jointly consider the role of monetary, exchange rate, macroprudential, and capital flow management policies, and their interactions with each other and with other policy levers, in response to volatile capital inflows.”
The event is set to get under way at 2pm on Thursday.