Debt Cancellation Talks: Ghana postpones China visit
Government has postponed a high-level delegation visit to China scheduled for this week, as it seeks talks for possible debt cancellation, according to Finance Minister Ken Ofori-Atta. The delay is attributed to the upcoming meeting of the National People’s Congress of China scheduled for early March. The rescheduled talks with China will now take place later next month.
Ghana secured a staff-level agreement with the International Monetary Fund (IMF) in December for a US$3 billion loan. However, the money’s approval is contingent on Ghana restructuring its debt of GHC467.4 billion (US$39 billion). As of September 2022, Ghana owed about US$13 billion in Eurobonds and US$4 billion in bilateral loans, of which US$1.7 billion is owed to China, according to the International Institute of Finance.
Ofori-Atta has emphasised the importance of the China visit, stating that the talks would have been “a crucial opportunity to discuss debt sustainability” and to secure a debt service suspension. With debt restructuring seen as essential for the IMF loan to proceed, the delay may be seen as a setback for the government.
At a bilateral meeting with the German Federal Minister for Economic Cooperation and Development (BMZ), Svenja Schulz, Ofori-Atta discussed the role of the KfW in the post-World War II revitalisation of the German economy. They also talked about the need to deploy a similar mechanism in Ghana, using the newly established Development Bank Ghana as a catalyst for the country’s economic recovery.
The Ghanaian government is looking to leverage the Development Bank Ghana to create jobs and support small and medium-sized enterprises, particularly in the agriculture and manufacturing sectors. The bank has been set up with a capitalisation of GHC800 million (US$134 million) and is expected to provide long-term finance to businesses at low-interest rates.
While the delay in talks with China may be seen as a setback, the government remains focused on restructuring its debt and securing IMF approval for the loan. The role of the Development Bank Ghana in driving the country’s economic recovery is also seen as crucial, and the government is looking to draw on the experience of Germany to make this a reality. As Ghana looks to recover from the impact of the pandemic on its economy, it will require continued cooperation and support from the international community.
