China pledges support to Ghana’s debt restructuring programme
China has expressed confidence in Ghana’s economic management and has pledged to help the country seek debt servicing relief, according to the Financial Times. Last week, Chinese Finance Minister Liu Kun met with his Ghanaian counterpart, Ken Ofori-Atta, in Beijing and stated that the Chinese authorities “have confidence in Ghana’s economic management and its long-term economic viability”.
Mr. Kun went on to say that he wanted to ensure that Ghana’s external debt treatment request was considered expeditiously and was accompanied by a high-level delegation, including Mr. Wu Fuli, Chairman of China Exim-Bank. The Chinese officials expressed their commitment to supporting Ghana’s medium and long-term development aspirations and advocated for more concessional and grant funding for the country, especially during this time of short-term liquidity challenges.
The COVID-19 pandemic, geopolitical tensions, and interest rate hikes in advanced countries have caused economic difficulties for Ghana, as with other African countries. To address these challenges, Ghana’s parliament is set to consider three key revenue measures whose approval is expected to rake in ¢4.4 billion in domestic revenues. This is one of the critical actions that Ghana needs to take to trigger IMF Executive Board approval of a $3 billion facility for the country to ease its current economic difficulties.
Ghana has made significant progress in its negotiations for debt treatment with the Paris Club and other bilateral creditors under the G20 Common Framework. The Paris Club has agreed to form the Official Creditor Committee and deliver financing assurances to the IMF soon in order to clear the path for its executive board’s approval of Ghana’s program by early May. Mr. Ofori-Atta has also requested that China co-chair the Official Creditor Committee.
The Chinese officials who met with Mr. Ofori-Atta included Deng Li, Vice Minister of Foreign Affairs; Li Fei, Vice Minister of Commerce; Wang Weidong of the China Development Bank (CDB), Yang Haitao, General Manager of the International Commercial Bank of China (ICBC), and Luo Zhaohui, Chairman of the China International Development Cooperation Agency (CIDCA). Mr. Ofori-Atta congratulated Mr. Kun on his reappointment as Minister for Finance following the recently-ended National People’s Congress and thanked the Chinese authorities for participating in the G20 Creditor Committee meeting on March 21, 2023.
China’s commitment to helping Ghana resolve its short-term liquidity challenges and supporting its medium and long-term development aspirations is a positive development for Ghana. The country’s progress in negotiations for debt treatment with the Paris Club and other bilateral creditors under the G20 Common Framework is also encouraging. As Ghana takes critical steps to trigger IMF Executive Board approval of a $3 billion facility for the country, the support of China and other multilateral and commercial creditors will be crucial to ensure debt sustainability and sustainable development.
