Ministers find ‘no mercy’ from cash crunch

African finance ministers appealed for help and “common humanity” in their fight against a vicious funding squeeze caused by mistakes its politicians blame on wealthy countries, which the Israel-Hamas war may now make worse.

Higher interest rates and surging inflation after the US and Europe spent trillions of dollars during the pandemic hit poor nations from both sides, said Egyptian Finance Minister Mohamed Maait.

“We have to pay the cost,” he said Saturday in Marrakech, Morocco during an event on the sidelines of the annual meetings of the International Monetary Fund and World Bank. “With the war, the pain becomes very hard for us.”

The potential risk to the global economy from a widening Middle East conflict – and what that would mean for poor nations already in debt distress – has been a key concern during the gatherings.

The meeting is being held in Africa for the first time since 1973.

Surging food prices in the aftermath Russia’s invasion of Ukraine have caused a cost of living crisis across Africa, while heavy borrowing costs are raising the risk of default.

Zambia on Saturday confirmed it had agreed to a memorandum of understanding to restructure its loans with official creditors, co-led by China and France, finalizing a US$6,3-billion deal reached almost four months ago.

Egypt is in talks with the IMF to boost its rescue program to over US$5 billion from US$3 billion, according to people familiar with the discussions.

Maait, on Saturday, said it “went east” to find affordable lending and will issue a panda bond next week, because western capital markets became too costly.

“The issue of high debt, high debt financing, low liquidity — all these represent the challenges we’re facing,” he told the event hosted by the African Center for Economic Transformation and the Policy Center for the New South.” – Bloomberg