Addis Ababa, Ethiopia (PANA) – UN Economic Commission for Africa (UNECA) called for US$2.6 billion debt cancellation to countries worst affected by the Ebola outbreak and warned that foreign aid pledges could spark a debt crisis in Guinea, Sierra Leone and Liberia.
ECA Executive Secretary, Carlos Lopes, said Monday, that international donors, generous in making aid pledges to enable the West African states deal the Ebola outbreak, should now cancel the debts to avoid creating a debt distress in the three states.
“The potential impact of Ebola is very clear,” Lopes told journalists during Monday’s launch of a new report detailing the economic and social impact of Ebola on Africa. “Donors have been generous on debt relief and these countries have benefited before but we are now calling for debt cancellation, which is much higher than debt relief.”
The World Bank has pledged US$1 billion to boost Ebola response and help raise investments, trade and jobs in the face of job cuts sparked by cuts in economic activity and shorter working hours for banks, while the International Monetary Fund (IMF) pledged US$300 million to fill budget gaps in the three affected countries.
Guinea, one of the worst-affected countries, received a debt relief under the Heavily Indebted Poor Countries (HIPIC), helping to cut interest on foreign debt from 0.7% in 2012 to 0.2% in 2014.
The report shows that the spread of the disease is creating a deep fall in state revenues while demand on public spending to control the disease rise sharply.
While warning that the disease might not cause a huge economic impact when fully under control in the three worst affected countries, Lopes said the social impacts were greater.
“The mobilization of the funds should be transitional. These countries are coming from civil war and they were performing well before the Ebola outbreak,” Lopes said.
Lopes said debt cancellation of some US$2.6 billion would have a longer-term impact on the efforts to deal conclusively with the Ebola outbreak.
Sierra Leone has recorded a shortfall in revenue, totaling US$46 million in 2014 and a further shortfall of US$91 million is expected in 2015. Liberia is expected to lose US$106 million, 5% of the government revenue, while Guinea is US$27 million short on revenue, according to the ECA report on the socio-economic impact of Ebola.
