Heavily indebted African countries charged extortionate interest rates. – U.N. Sec-Gen.

Having to pay “extortionate” interest rates, heavily indebted African nations are getting a raw deal from the global financial system, according to U.N. Secretary-General Antonio Guterres on Saturday.

In order to better effectively meet the requirements of developing nations, the head of the United Nations wants extensive changes made to the way that international financing is structured, he said during the opening ceremony of the annual African Union summit in Ethiopia.

He declared, “We require a new debt architecture that offers debt relief and restructuring to weaker countries.

The global banking system regularly denies debt relief and preferential financing to (poor countries) while demanding exorbitant interest rates.

Many developing nations experienced debt difficulty as a result of the coronavirus pandemic because they were expected to keep paying their debts in spite of the severe blow to their economy.

The International Monetary Fund said last year that public debt ratios in sub-Saharan Africa are at their highest levels in more than 20 years.

To help them manage the crisis, governments throughout the continent, including Ethiopia, sought debt restructuring agreements via an IMF program; however, the process’ conclusion has been postponed.

Once the epidemic damaged their finances, some countries that had not tried to restructure their debt, like Kenya, saw their indicators of debt sustainability deteriorate.

According to Guterres, all of these reasons have made it more difficult for them to invest in vital sectors such as health and education.

With one hand tied behind their backs, “African countries cannot… ascend the development ladder,” he remarked.

The call was echoed by Ethiopia’s Prime Minister Abiy Ahmed.

A certain amount of restructuring is required to make our external debt manageable, he said, adding that while nearly all of us want to return our economies to a growth track.

The summit, which brings together the leaders of the 55 African countries, is also concentrating on the continent’s worsening food and security issues.

More and more Africans are fleeing their homes due to armed conflict, which extends from the Sahel to the Horn of Africa, as well as the effects of drought and flooding.

In numerous countries, hunger has gotten worse due to the effects of armed conflicts as well as harsh weather that experts have connected to climate change.

After five unsuccessful rainy seasons, hundreds of thousands of people in Somalia are experiencing severe food shortages, putting the country in danger of going hungry.

Abiy remarked, “We need to closely evaluate why a third of the world’s starving people reside on our continent.