Ghana seeks support from China and India for external debt restructuring.
The government of Ghana has announced that it is engaging with two major creditors, China and India, to ensure that the country’s external debt restructuring program is expedited following a successful Domestic Debt Exchange Program (DDEP).
Speaking before Members of Parliament (MPs) on Thursday, Finance Minister Ken Ofori-Atta revealed that negotiations with Ghana’s external creditors for debt treatment have already commenced, with the government approaching major creditors like China and India to hasten discussions with the Paris Club. Mr. Ofori-Atta revealed that members of the Paris Club and Non-Paris Club had signaled their commitment to establishing a Creditor Committee to evaluate Ghana’s request for debt treatment under the Common Framework by the end of February 2023.
The Minister further stated that this move forms part of a broader Government response strategy aimed at addressing the current economic challenges and securing an IMF program to bolster confidence in the economy.
With Ghana’s public debt currently at 103% of GDP, the government is complementing debt restructuring efforts with domestic mobilization enhancement. Mr. Ofori-Atta implored MPs to pass three revenue mobilization bills to support Ghana’s debt sustainability efforts to reduce the debt to 55% by 2028, emphasizing the urgency of this action in securing Board Approval for Ghana’s IMF program by the end of March 2023.
The passage of these bills will enable the government to complete four of the five agreed Prior Actions in the Staff Level Agreement, as Tariff adjustment by the PURC, Publication of the Auditor-General’s Report on COVID-19 Spending, and Onboarding of GETFUND, DACF and Road Fund on the GIFMIS were already completed.
Mr. Ofori-Atta revealed that the IMF program is critical to Ghana’s economic recovery, and the government is working with its creditors, including Germany, the second-largest bilateral creditor to Ghana after China, to return to economic growth.
The Finance Minister said that Germany has already expressed its readiness to support Ghana in its ongoing debt restructuring process, and he is hopeful that the Creditors Committee can negotiate and relieve the burden on the country.