This archive report was first published on 16 May 2020.
As the world grappled with the devastating social and economic impacts of the Covid-19 pandemic, the International Monetary Fund (IMF) and World Bank announced emergency credit lines for roughly two dozen African countries, including those in East Africa.
East Africa's finance ministers have been actively seeking 'corona response' and 'budget support' funding from various lenders, with Uganda securing a $491 emergency facility from the IMF and planning to borrow an additional 600 million Euros from the EU.
Uganda's example is a cautionary tale of the inherent risks in the Covid-19 debt relief bonanza. With a GDP of 28.5 billion in 2019, the additional borrowing will tip the debt to GDP ratio past 50 percent, a critical threshold.
Uganda's neighbours, who were hovering in the high 50s and lower 60s, have similarly piled up additional credit. The major obstacle to debt cancellation and payment holidays is the West's insistence that China, which holds a huge chunk of African debt, must be part of any multilateral debt relief effort for the continent.
China has not warmed up to this proposition so far, choosing instead to negotiate bilaterally with its African debtors. The calls for cancellation suggest that African leaders are conscious of the precarious position previous borrowing has put their economies into.
