Africa is being the victim of “extortion” by the financial system, accuses Guterres | African Union

The Secretary General of the United Nations, António Guterres, denounced this Saturday the “extortion” that the African continent is being victimized at the hands of the global financial system that prevents African countries from developing their “vital systems”. The former prime minister considers that a “radical transformation” of the financial system is needed to be able to counteract this trend.

In a speech at the opening of the 36th African Union Summit, in Addis Ababa, Ethiopia, the UN secretary general said that, as a rule, “the world financial system denies” African countries “relief of their debt or any financing on favorable terms, while charging exorbitant interest”.

That is why “African countries cannot invest in fundamental areas”, such as health, education, ecological technology, social protection or the creation of sustainable jobs, while being forced to climb “the ladder of development with one hand tied behind his back.”

To demonstrate his position, Guterres used the example of public debt in sub-Saharan Africa which, according to figures from the International Monetary Fund, reached the highest point in more than two decades.

Several governments requested agreements to restructure their debt to facilitate the exit from the crisis, however, the process is delayed. Other countries, such as Kenya, which did not want to participate in the restructuring program, saw their debt sustainability indicators drop, especially due to the impact of the covid-19 pandemic.

“We need a new debt architecture that brings relief and debt restructuring to vulnerable countries, including middle-income countries, while allowing immediate debt suspension and amortization to countries that need it”, defended the secretary UN General.

In this sense, and as he has done on other occasions, Guterres asked the multilateral development finance institutions to transform their business model in order to allow another approach to the issue of risk. One of the options would be the “massive use of its funds to attract greater flows of private capital”.

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