African Development Bank (AfDB) has called for a quick and comprehensive plan to tackle recession in Africa with debt restructuring.

This call was made by the President of AfDB, Femi Adeshina, and the recipient of the 2001 Nobel Memorial Prize in Economic Sciences, Professor Joseph E. Stiglitz, at the launch of the AfDB’s 2021 edition of its annual African Economic Outlook.

According to the report on Africa’s Economic Outlook by the AfDB group, the continent’s GDP contracted by 2.1 percent in 2020, this shows that Africa is in recession.

Commenting on how to improve the continent’s economy, AfDB boss said “setting up a homegrown financial stability mechanism where we work together to mutualize our funds and ensure we avoid the spillover effects that come from global pandemics or any external shocks”

“We must start by making sure that we carry out the macroeconomic policy reforms and the fiscal policy reforms that we need to get done,” he said, adding that Africa “is not looking for a free pass. We are just looking for an equitable way in which Africa’s fiscal space gets dealt with,” he added.

In support of this view, Stiglitz added that there is a need for a debt restructuring in the continent, which calls for an international debt framework that includes the private sector, given its growing role as a source of government debt.

“You need debt restructuring, and that needs to be really high on the international agenda. Every country has bankruptcy laws but there’s no bankruptcy law for international debt. When there’s too much debt, it’s as much the creditor’s problem as the debtor’s problem.”

Stiglitz added: “What needs to be done with debt is comprehensive and quick restructuring. We don’t want to fall into the trap of doing too little, too late,” Stiglitz proposed.

According to the AfDB report, Africa’s collective debt now stands at 70% of the continent’s gross domestic product (GDP).

Although, GDP is projected to grow by 3.4 percent in 2021. The report estimates that African governments will require additional gross financing of about $154 billion in 2020/21 to respond to the Covid-19 crisis.

Expressing hope over the reaponse of the continent to COVID-19 crisis as a result of $500 billion, that the International Monetary Fund could issue, in accordance with the G20’s recommendation at the end of February.

Adesina said these funds will “go a long way” to stabilizing foreign reserves and the exchange rate, allowing countries to handle debt and re-engage in massive pro-growth investments that will help them to quickly recover from the Covid-19 pandemic.