Dr Priscilla Baffour warns of an avalanche of lawsuits against Gov’t amid negotiations with commercial creditors

Dr Priscilla Baffour warns of an avalanche of lawsuits against Gov’t amid negotiations with commercial creditors

Senior Lecturer at the Department of Economics at the University of Ghana (UG), Dr Priscilla Twumasi Baffour, has warned of a possible avalanche of lawsuits against the Government amid its negotiations with external commercial creditors.

This, she noted, may be due to a number of reasons with some being the unwillingness of commercial creditors to accept the 20% – 50% haircut on investment, the diversity of the composition of the external commercial creditors, and the relative difficulty in negotiating with commercial creditors as compared to bilateral and domestic creditors as well as the fixation of commercial creditors on returns on their investments.

“If care is not taken, there could be an avalanche of lawsuits by commercial creditors against Government. Commercial creditors are a collection of institutions and individuals and it’s difficult negotiating with them, so that’s where the task is for the Government. Government has to be intentional about its negotiations with the commercial creditors,” she remarked.

“But I believe nothing is insurmountable, it can be done,” she added.

Dr Baffour made the assertions speaking on the NorvanReports and Economic Governance Platform X Space Discussion themed, “Analyzing Ghana’s Agreement With External Commercial Creditors: The Impact on the Economy in an Election Year.”

Meanwhile, Finance Chief Ken Ofori-Atta has expressed optimism about reaching a debt deal agreement with commercial creditors particularly the country’s Eurobond holders by the middle of March this year.

Speaking at a joint press conference by the IMF, the Finance Ministry and the Bank of Ghana, on Friday, January 19, 2024, Mr Ofori-Atta noted the successful first review of the IMF programme by the Board of the Fund, sets the stage for the country’s impending re-engagement with bondholders which will commence this week.

“Now the final crucial step in our strategy involves the restructuring of our commercial debt, particularly the euro bonds following the Board’s approval.

“We are working hard to reach an agreement with our bondholders in the shortest possible time. We are optimistic that we wll arrive at an agreement no later than mid-March. Allow me to assure you that we remain steadfast in our commitment to act resolutely.

“Ultimately, we are showing our resolve and the economy has certainly turned the corner and the government will focus on attaining a more resilient, transformed economy that delivers higher living standards for our people within the shortest possible time,” he stated.

Ghana expects to reach a deal with eurobond investors to revamp the $13 billion debt owed to investors.