South Africa won’t join collective negotiations with creditors to suspend or write off African nations’ debt, an envoy for the country told the Sunday Times newspaper.
Trevor Manuel, a special envoy to the African Union, said his country’s position was complex because most of its debt is held locally. Some African governments are pushing for a moratorium to repay international creditors after coronavirus-induced lockdowns damaged their economies.
“The bulk of the debt is actually held by South African pension funds,” the former finance minister said. “Once you enter into these kinds of agreements you might actually be compelled to say to South African pension funds, we are sorry but [we] can’t deal with your pensions.”
Institutions including the World Bank and International Monetary Fund have indicated they would negotiate with each country individually and not as a bloc, he said.
The World Bank warned in April that sub-Saharan Africa will suffer its first recession in 25 years, with gross domestic product in the region probably shrinking between 2.1% and 5.1% in 2020. South African President Cyril Ramaphosa said in late May that the continent could get more than US$200B in additional support after the United Nations called for a global response package for the virus.