Africa is getting a raw deal from rating agencies during Covid-19.

AuthorYedder, Omar Ben

Regis Immongault--MP and former Minister of Foreign Affairs and Minister of the Economy, Gabon

The MP Regis Immongault (right) has been at the forefront of Gabon's policy making, as Minister for the Economy and then Minister of Foreign Affairs. He talks to Omar Ben Yedder about why African countries seem to be getting a raw deal from rating agencies during the pandemic, thus making essential borrowing more difficult and more expensive.

The pandemic is providing a stress test across many different issues --"revealing our weaknesses," says Regis Immongault. "It obliges us to remedy them. Our countries need to be ready to face future challenges on all levels: economic, monetary and social." Gabon was caught off-guard during the last oil crisis in 2014, when the price of oil fell by over 50%. The country was in the middle of a massive public investment programme. It had considerably increased public spending to upgrade the country's infrastructure and set up a programme to wean itself off oil by transforming its wood and manganese into finished products as part of its industrial policy. The sharp and rapid fall in the price of oil required drastic cutbacks and the country underwent a reform programme tapping into IMF funding.

Oil still plays an important part in terms of what the government can spend. It represents 40% of public revenues and 68% of the country's exports.

Gabon was lauded by Lionel Zinsou, a prominent economist and investor, as well as former Prime Minister of Benin, for its rapid response and the generous package to support livelihoods that the government announced at the start of the pandemic.

However, as Immongault admits, the country is caught between a rock and a hard place. Debt levels are manageable but African countries don't have the ammunition at their disposal to do

"whatever it takes", as the Western central bankers have proclaimed.

"There need to be considerable 'out-of-the-box' measures for African economies to navigate the rough ride ahead," he says. "Those, like Gabon, that are considered middle-income countries will be worsehit as they are not included in the debt standstills that have been agreed."

All this will ultimately limit the counter-cyclical measures they can apply, such as a fiscal stimulus, unlike Western nations that are raising record amounts of debt and pumping literally trillions of dollars into their economies.

It's a frustrating situation, Immongault explains, as Gabon has relatively low debt...

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