A case for external debt cancellation for Ebola affected countries

Abstract

It is common to call for the cancellation of debts of countries that have been severely affected by sudden shocks such as natural disasters or outbreaks of disease. Haiti, for example, had the debts it owed to major creditors cancelled after the 2010 earthquake. Guinea, Liberia and Sierra Leone already had weak initial conditions, structural vulnerabilities and limited potential to sustain growth and the EBOLA outbreak has pushed them to the limit by widening their fiscal deficits. If the countries have to continue making debt repayments in the absence of significant financial inflows, they will not be able to fulfill their fiscal and balance-of-payment needs. Cancelling the external debt of the three countries hardest hit by the EBOLA outbreak, will give these countries the breathing space they need to address the complex social and economic development challenges they now face. In addition to meeting the challenges of the EBOLA outbreak, these countries need to promote positive economic growth, improve public service delivery, meet regular debt service payments and plan their long-term social and economic development.