US Organizations Urge Treasury to Support Global Response to Covid-19

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 The Hon. Steven Mnuchin
Secretary, United States Department of Treasury
1500 Pennsylvania Avenue NW
Washington, DC
September 16, 2020

Dear Secretary Mnuchin,

We, the undersigned organizations concerned about Africa in collaboration with the Advocacy Network for Africa, urge you to support Special Drawing Rights at the International Monetary Fund (IMF) and debt cancelation for countries struggling to respond to the COVID-19 pandemic. As organizations working throughout Africa, we are deeply concerned about the coronavirus’s impact on the continent and urge you to move quickly to prevent further devastation and loss of life.

Although African countries have recorded fewer cases than the US, they face unique challenges given their minimal resources, inadequate health systems, and medical personnel, and acute shortages of basic essential services like reliable water and electricity. Massive and crowded informal settlements, internally displaced peoples, and people in refugee camps remain vulnerable to the coronavirus.

Without financial support from the US and the international community, COVID-19 can easily overwhelm these countries. Some of them are already struggling with the rising numbers and cannot provide testing, contact tracing, and support for social distancing for low-income families. In the last month, COVID-19 infections have doubled as the continent passes 1 million reported COVID-19 infections, while the lack of testing kits or capacity to conduct contact tracing prevents local and international stakeholders from knowing the exact number of infections. Additionally, the lack of Personal Protective Equipment is hampering the crucial work of saving lives.

Additionally, the economic downturn caused by COVID-19 is projected to cut Africa’s economic growth by at least half. The COVID-19 pandemic has caused high unemployment numbers, destroying the tourist industries and agricultural export on which most African countries rely. Through no fault of their own these countries are hit by a shock that will devastate their economies, wiping out years of progress on growth, development, and poverty reduction.

To prevent cascading crises on the continent, we call upon the Department of Treasury to prioritize the following:

Issuance of Special Drawing Rights

The seriousness of the current crisis warrants an issuance of at least two trillion Special Drawing Rights (SDRs) from the IMF. SDRs are essentially the Fund’s reserve currency, to be made available in times of economic crisis or downturn (as they were last used in a major allocation, in

2009). In this scenario of prolonged uncertainty, they are a speedy way to enable countries to boost reserves and stabilize economies, helping minimize other economic losses, without any cost to the US government. They also provide much needed foreign exchange resources to countries whose capacity to earn them through trade and remittances will remain severely constrained in the short to medium term. Exports from developing countries are expected to shrink by at least 20 percent this year, four times the reduction in the wake of the 2009 Global Financial Crisis. In addition to new issuance, adopting a mechanism to facilitate advanced economies using their SDRs to support low-income countries would increase the benefit for the countries that need these resources the most.

The World Food Program has estimated that the number of people facing acute hunger will double this year, from 135 million to 265 million, because of the deep world recession. Without additional resources, millions of lives will be in jeopardy. These resources from the IMF are not loans, no one has to pay them back, but they will help save lives by assisting countries to avoid worsening economic crises and having the resources to stop or slow the spread of COVID-19.

Debt Relief and Debt Cancellation

We welcome current global initiatives to address the impact of debt in this crisis, including the G20’s Debt Service Suspension Initiative (DSSI). Forty-two countries have requested a suspension of payments under this initiative, amounting to US $5.3 billion of debt payments deferred. However, this is nowhere near enough to enable the most impoverished nations to mount an effective response to the pandemic and embark on a just recovery. The United States, the G20, and the global community must take much bolder steps, such as extending the debt service expansion to two years and total debt cancelation for highly indebted low-income African countries.

We urge the Trump administration to press the G20 to go beyond its currently agreed debt payment suspension measures by extending the suspension to 2021 and permanently waiving payments due during this period. Furthermore, the G20 should set up a process for orderly restructuring all countries’ external sovereign debt that needs such relief to respond to or recover from the COVID-19 pandemic. This process should build upon longer-term debt sustainability discussions, with robust human rights impact assessments designed to ensure that all are guaranteed economic and social rights. At a minimum, this should include the 77 poorest countries. Debt cancellation should be accompanied by robust transparency and accountability mechanisms at the national level to ensure that money freed up is not lost to corruption or wasteful expenditure. We urge you to take the necessary steps to ensure that this can be done as soon as possible and that the G20 Action Plan is updated accordingly.

Thank you for your swift attention to these requests – our actions over the next few months will have a tremendous impact on people’s wellbeing across the African continent for years to come.

Sincerely,

Organizations:

  1. Advocacy Network for Africa
  2. Action Corps
  3. Africa Faith and Justice Network
  4. Africans Rising for Justice, Peace, and Dignity
  5. Africa World Now Project
  6. American Friends Service Committee
  7. Amnesty International
  8. Association of Concerned Africa Scholars (USA)
  9. Bread for the World
  10. Brooklyn For Peace
  11. Carter Center
  12. Center for International Policy
  13. Chicago Area Peace Action
  14. Chicago Religious Leadership Network on Latin America
  15. Church of the Brethren, Office of Peacebuilding and Policy
  16. Church World Service
  17. Demand Progress Education Fund
  18. Environmentalists Against War
  19. Friends Committee on National Legislation
  20. Friends of Angola
  21. Future African Leaders Project
  22. Give Them A Hand Foundation
  23. Humble1
  24. Iowa Interfaith Power & Light
  25. Justice Is Global
  26. Maryknoll Office for Global Concerns
  27. Mennonite Central Committee U.S. Washington Office
  28. National Advocacy Center of the Sisters of the Good Shepherd
  29. North American Somali Women’s Association
  30. Our Lady of Charity of the Good Shepard, U.S. Provinces
  31. Oxfam America
  32. Pax Christi, USA
  33. Peace Action New York State
  34. Presbyterian Church (U.S.A.)
  35. STAND: The Student-Led Movement to End Mass Atrocities
  36. The Oasis Network for Community Transformation
  37. United African Congress
  38. United Methodist Church – General Board of Church and Society
  39. Torture Abolition And Survivors Support Coalition International
  40. United Church of Christ, Justice and Witness Ministries
  41. Watch Democracy Grow
  42. WESPAC Foundation

Cc:

  • The Hon. Nancy Pelosi, Speaker of the House of Representatives
  • The Hon. Kevin McCarthy, House Minority Leader
  • The Hon. Mitch McConnell, Senate Majority Leader
  • The Hon. Chuck Schumer, Senate Minority Leader
  • The Hon. Jim Risch, Chairman, Senate Committee on Foreign Relations
  • The Hon. Bob Menendez, Ranking Member, Senate Committee on Foreign Relations
  • The Hon. Eliot Engel, Chairman, House Foreign Affairs Committee
  • The Hon. Michael McCaul, Ranking Member, House Foreign Affairs Committee
  • The Hon. Mike Crapo, Chairman, Senate Committee on Banking, Housing and Urban Affairs
  • The Hon. Sherrod Brown, Ranking Member, Senate Committee on Banking, Housing and Urban Affairs
  • The Hon. Maxine Waters, Chairwoman, House Committee on Financial Services
  • The Hon. Patrick McHenry, Ranking Member, House Committee on Financial Services
  • The Hon. Richard Shelby, Chairman, Senate Committee on Appropriations
  • The Hon. Patrick Leahy, Vice Chairman, Senate Committee on Appropriations
  • The Hon. Nita Lowey, Chairwoman, House Committee on Appropriations
  • The Hon. Kay Granger, Ranking Member, House Committee on Appropriations
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