This is on the grounds that the moratorium on the debt of the poorest countries, faced with the economic consequences of the pandemic Covid-19, initiated by the world Bank with the support of the G20 and the united Nations, is likely to increase the losses to private creditors that the credit rating agency Moody's took the decision to downgrade the sovereign rating of the five countries. It is the Ivory Coast, Senegal, Cameroon and Ethiopia, and Pakistan. These States had received the endorsement of international donors to temporarily suspend the payment of their debt from this year to the members of the Paris Club, as well as by a handful of creditors are emerging (China, India, saudi Arabia, Turkey, South Africa) and then to repay this money over a period of four years. No debt has been cancelled. It should be noted that, in the event of a deterioration of their rating, these countries will have to pay more to borrow.
The world Bank has estimated that up to $ 11.5 billion of refunds could be delayed this year if the 73 eligible countries participating in the initiative. To date, however, only 42 have applied for a relief, according to the G20, and 18 have signed agreements with the Paris Club.
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market pressure
The department of economic and social affairs of the united Nations has immediately challenged the position of Moody's reports the Financial Times. For the analysts of the united Nations, the program " should improve the debt sustainability of countries and, therefore, should not serve as a basis to degradations of credit ". This same department added that " the borrowing countries should exit the program with a credit stronger than if they had not participated ".
It should be noted that the States, in particular those of the continent, have always had in mind this possibility of seeing their notes downgraded to the result of the negotiations. Hence the suspicion of some governments that do not want to be stigmatized. In fact, the risks are enormous when a State negotiates with private lenders, warns the rating agency. If a country wants to subscribe to the moratorium, but that he is in a situation that was already fragile and in debt from the private sector, then the question of the risk of default arises with acuity. Moody's had since the announcement of the moratorium published a note in which it warns that " the debt relief will be a benefit to low-income countries, but raises the possibility of a default of payment vis-à-vis the private sector."
where the slow or of the lively debate in some countries that are still not manifested as they would need. Many are those who are at a high risk of surrendement. The world Bank cites countries such as Ghana or Kenya. And we must act quickly, since some States, such as South Sudan or Somalia, are already in distress.
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The call to private creditors
The other lever : it is the call to private creditors. The G20 has launched a call to participate in heights to be comparable. "I am disappointed with the little progress registered to date while we are immersed in a global crisis and I urge commercial creditors to form a coalition, which will help to suspend the real service of debt by the poorest countries ", expressed the president of the world Bank, David Malpass, Saturday. He argues from the beginning that the G20 countries push " the maturity of the Initiative for suspension of the service of the debt (ISSD) until the end of 2021 [instead of the end of 2020, as planned at present] ". Same goes for France, member of the Paris Club. "The economic crisis will continue in 2021 everywhere in the world. France calls on the G20 countries to extend the moratorium on the debt service-to give the poorest countries the means to overcome it, " said the French minister of Economy, Bruno Le Maire, in a written statement last week.
The NGO One, which also asks the G20 to extend the agreement to suspend on the debt, wants the group also appealed to " the institutions, multilateral and private creditors to support a moratorium on the repayment of the debt ".
One denounces in particular the attitude of the world Bank : since the beginning of the health crisis, the poorest countries have repaid " six times more than what they have received emergency assistance on his part ", according to a report by the NGO published last Friday. "The inability of the world Bank to support a moratorium on multilateral debt [...] resulted in a slower response" to the pandemic, commented in a press release, Najat Vallaud-Belkacem, director France of One.
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Moody's persists and signs
Response of Moody's through Matt Robinson, head of Middle East and Africa group of sovereign risk : "It would not be appropriate, in this context, assigning the stable outlook to the usual notation ", he said to our colleagues on the Financial Times. "We need to recognize that there is a risk ", he insisted. "The IMF and the world Bank are in a position to be very influential, [able] to exercise pressure on the sovereign to implement measures that could ultimately be negative in terms of credit to the private sector. "
In separate notes on each of the countries Moody's has been clear, although some governments, such as those of Senegal or Côte d'ivoire, have committed to repay the private creditors rather than to ask them to renegotiate, to the agency, these promises are in contradiction with the call of the G20 to the private sector lenders " are part of terms similar ". "The review period will allow Moody's to evaluate how the apparent tension will be resolved between the government's desire not to extend the participation to the Initiative of suspending the service of debt beyond of the creditors of the public sector and the call of the G20 to the participation of private sector lenders. It will assess whether the participation of Senegal, this initiative will be effectively implemented without the participation of the private sector and, in the contrary case, how less would be consistent with the expected losses, " write the experts of Moody's for the countries of West Africa still far from being out of the health crisis, and economic.
Moody's may it go to the end of his reasoning ? For the moment, neither of the two most important agencies, that is to say, Fitch and S & P Global, have put the country under surveillance because of their participation in the moratorium on the debt.
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