African finance ministers launch debt talks with creditors

African finance ministers started talks with private creditors to find a way to temporarily suspend debt payments without triggering defaults.

At least a dozen African finance ministers spoke during the hour-and-half virtual meeting with more than 100 creditors recently, according to a representative of private creditors who attended the gathering.

Both sides talked about mechanisms that would allow nations to suspend payments while guaranteeing their access to debt markets in the future, said the representative, who asked not to be named because the discussions were private. Both sides agreed to hold more meetings.

African countries are asking official and private creditors to temporarily suspend payments in order to channel resources to contain the coronavirus pandemic. The virus threatens to overwhelm the health system of a continent that is home to two-thirds of the world’s poor.

While official creditors have agreed to halt payments this year on about $20 billion of obligations, getting private investors to join the initiative is proving more difficult due to legal and financial complexities.

Vera Songwe, the head of the United Nations Economic Commission for Africa, participated in the meeting, the person said. The African Union’s special envoy Tidjane Thiam, chaired the discussion, according to a statement by UNECA and the Washington-based Institute of International Finance.

“A one-size-fits-all solution may not apply in light of country specific characteristics,” they said in a joint statement. “Communication to and from all stakeholders needs to be well managed so as not to cause an unnecessary disruption in the crucial flow of private capital.”