Covid-19: Trevor Manuel says SA won't be part of African debt talks

14 June 2020 - 00:00 By S'THEMBILE CELE
Former finance minister Trevor Manuel.
Former finance minister Trevor Manuel.
Image: ALON SKUY

SA will not be part of any collective discussions on the cancellation or suspension of the debt of Africans nations, because most of its debt is held locally.

Creditors told the AU's Covid-19 special envoys they would prefer independent negotiations with countries in response to calls for an urgent debt standstill to buy the continent time to navigate through the coronavirus crisis.

Former South African finance minister Trevor Manuel, who serves as one of the five AU envoys, told the Sunday Times that talks had begun with a number of the continent's creditors in an attempt to arrest mass capital outflows and "win a debt standstill".

The other four envoys are former Algerian finance minister Benkhalfa Abderrahmane, former Nigerian finance minister Ngozi Okonjo-Iweala, former president of the African Development Bank and former Rwandan finance minister Donald Kaberuka and the former CEO of Credit Suisse Tidjane Thiam.

The envoys participated in a meeting of the AU's Assembly of Heads of State and Government and the chairs of its regional economic communities. AU chair President Cyril Ramaphosa presided over the meeting.

Manuel said the International Monetary Fund and the World Bank had stated they would not negotiate with the continent as a bloc, but would deal with each country separately, prioritising the least-developed countries.

"The complexity of the South African position is that the bulk of the debt is actually held by South African pension funds. And once you enter into these kinds of agreements you might actually be compelled to say to South African pension funds, we are sorry but [we] can't deal with your pensions, but this is how this matter is panning out. So South Africa has actually not entered discussions formally into these issues. I think that this is a reasonable approach to it because the key issue is that the agencies have agreed initially to deal with the least-developed countries."

Among other interventions which the envoys will table with creditors is allowing favourable conditions for debt suspension, including the freezing of interest.

On calls for debt cancellation, particularly for poorer countries, Manuel said it would be a waiting game for now and that a better perspective on the matter would come later in the year when the annual meetings of major lenders take place and the impact of the Covid-19 crisis, growth forecasts and other mitigating factors had become known.