China, Paris Club,other creditors agree to form Official Creditor Committee
In a move that could bring much-needed relief to Ghana’s struggling economy, the Paris Club, China, India, Saudi Arabia, and Turkey have agreed to form an Official Creditor Committee (OCC) to provide financing assurances for the country to the International Monetary Fund (IMF). The committee’s aim is to help clear the path for a Fund Executive Board approval by early May 2023.
This comes after Ghana made progress in negotiating a debt restructuring deal with China. In fact, during a recent visit to China, Ghana’s Finance Minister, Ken Ofori-Atta, requested that China co-chair the Official Creditor Committee, which was met with positive feedback from the Chinese Finance Minister, Liu Kun.
Mr. Kun expressed confidence in Mr. Ofori-Atta’s ability to manage the Ghanaian economy, stating that China would help Ghana and ensure that its external debt treatment request was considered expeditiously. The Chinese Finance Minister emphasized the long-standing and prosperous relationship between Ghana and China, stating that it imposes a responsibility to help Ghana in its current economic situation.
Furthermore, Mr. Kun stated that China is committed to helping Ghana resolve its short-term liquidity challenges while supporting the country’s medium and long-term development aspirations. This commitment aligns with China’s belief in promoting debt sustainability and sustainable development, as well as advocating for more concessional and grant funding for Ghana, particularly during these challenging times.
The Chinese Vice President of China Exim bank, Mr. Zhang Wencai, emphasized that Ghana needs more concessional and grant funds from creditors, and urged Multilateral Banks to do more for Ghana. This is a sentiment that has been echoed by many experts, who note that Ghana’s economic struggles have been exacerbated by the Covid-19 pandemic and the sharp decline in commodity prices.
Indeed, Ghana has been grappling with high levels of debt and a widening budget deficit, which have put significant strain on the country’s economy. In response, the government has implemented several measures, including seeking debt restructuring deals with its creditors, as well as implementing austerity measures to cut spending and reduce the budget deficit.
Despite these efforts, however, Ghana’s economic challenges have persisted, leading to the need for external financing assurances from the Paris Club, China, India, Saudi Arabia, and Turkey. This OCC is a crucial step towards securing this much-needed funding, and could provide a much-needed boost to Ghana’s economy.
Overall, while Ghana’s economic struggles have been significant, the formation of the Official Creditor Committee and China’s commitment to helping Ghana through its current economic challenges provides a glimmer of hope for the country’s future.
