Two women carry a bag of food in the Zambian village of Simumbwe.GUILLEM SARTORIO / AFP / GETTY IMAGES
In the early stages of the pandemic, with the West engrossed by its own - and unprecedented - recession, emerging countries became the great dead spot of the crisis: with precarious health systems, their economies were suffering the shock of the virus while the The rest of the world looked the other way.
Nine months later, the lights point the other way and, nevertheless, the signs that the crisis is taking precedence especially with developing nations are piling up: apart from China, the origin of the virus but whose economy has stoically resisted, the GDP decline in middle-income countries was around 5% in 2020 and this year's recovery will remain at 3.4%.
Both figures are similar to those of rich countries, but especially serious because they are economies with more fragile wickers and accustomed to much higher growth rates.
Debt and social tensions await around the corner.
Among them, one is one step ahead: Zambia.
On November 18, the African country became the first emerging market to announce that it was unable to meet its demanding schedule of repayment of foreign debt.
It was the official recognition that he had entered into
default
or suspension of payments, and it turned him, in short, into the canary in the mine of emerging countries.
“We have made the deliberate decision not to pay any of our creditors more,” announced the governor of the central bank, Christopher Mvunga, in Lusaka, the capital.
At the end of September, the government had already requested a six-month suspension of the payment of interest on this debt, but the initiative was flatly rejected by the creditors, who were sending the Zambian authorities into a dead end.
The straits, however, came from long ago.
For a year, the second largest African producer of copper - a raw material from which it obtains the bulk of its foreign exchange and which in 2020 has suffered more than significant ups and downs - has been for a year with water up its neck and a runaway debt, according to Jaime Atienza, an economist expert in external debt at the NGO Oxfam.
Estimated at 10 billion euros, this figure represents 80% of GDP in 2019, according to the African Development Bank, while in 2014 external debt accounted for 35%.
Their situation has been exacerbated by one of the worst droughts in decades, especially in the early stages of the year.
As for other low- and middle-income countries, the pandemic has been the last straw: the latest projections suggest that Zambia's GDP will have fallen by almost 5% in 2020 and will barely avoid stagnation this year (+ 0.6% ).
And the bump, especially strong in a country in which the per capita income does not reach 4,000 dollars per person (10 times less than Spain, five less than Mexico) has accelerated the process.
The first default of a term of almost 34 million in the repayment of a bond of 632 million occurred in mid-October, two weeks later the rating agency Standard & Poor's already included Zambia in the category of country in suspension of payments .
Despite its announcement, the government is trying to reschedule repayments in a negotiation process that continues with creditors, the main one being China.
"Zambia is just the tip of the
iceberg
and anticipates a cycle of African countries that may
default,
" says Atienza, who cites Chad and Angola as those in the worst situation, but also includes Ghana, Kenya or Ivory Coast.
At the beginning of the crisis generated by COVID-19, African countries launched an initiative to postpone the payment of foreign debt, which achieved its objective with part of it, the bilateral one.
Just a few days ago, the G20 released a roadmap to restructure this debt in the 38 countries hardest hit by the crisis.
However, the problem persists with private debt, in the hands of investment funds or the Chinese Development Bank.
“In order to pay, they will have to take serious cuts in public spending and this will have an impact on health and the most vulnerable.
At this time, governments should invest in supporting their producers and recovering their economy, but if they have to continue paying their debt, they will not be able to do so ”, adds Atienza.
Income drop in 90% of emerging markets
"It is necessary to address the financial fragilities of many of these countries, since the growth crisis affects household budgets and the balance sheets of vulnerable companies," said Carmen Reinhart, chief economist of the World Bank, on Tuesday. a horizon to say the least dark for the developing world: the pandemic has caused income losses in 90% of emerging countries, and in one in four it will erase the progress made in the last 10 years in a matter of months.
The famous specter of the lost decade in Latin America extends to a large part of the middle-income countries, which in recent times had shown themselves almost immune to recessions.
“The pandemic,” adds Ayhan Kose, Acting Vice President of Equitable Growth, Finance and Institutions for the Washington-based lender, “has greatly exacerbated debt risks in emerging markets and developing economies;
The weak growth prospects are likely to further increase the debt burden and erode the debt service capacity of borrowers, ”he says.
“The global community needs to act quickly and decisively to ensure that the recent accumulation of debt does not result in a series of debt crises.
The developing world cannot afford another wasted decade. "