Ghana’s March deadline for debt relief negotiations could be pushed back – Economist warns
Ghana’s President, Nana Akufo-Addo, has set a March deadline for the completion of the country’s debt relief negotiations and executive board approval. However, economist Dr. Theo Acheampong has said that meeting this timeline is not feasible, and the earliest the negotiations could be completed is May.
According to Dr. Acheampong, the debt relief negotiations involve four major players: China, the Paris Club, the World Bank and the IMF, and Eurobond holders. These players each have their own interests, making it difficult to address the specific concerns of all parties involved in a short period of time.
Ghana owes approximately 1.9 billion USD to China out of its total external debt portfolio of 29 billion USD, which is around 7%. However, the country owes 13 billion USD to Eurobond holders, which is roughly 45% of its external debt. Dr. Acheampong noted that everyone has their interests in the negotiations, and coordinating those interests within the timeframe set by the Ghanaian government is a challenging task.
The economist further explained that the restructuring of domestic debt, which is covered under local law, differs significantly from external debt restructuring. The complexity of coordinating the interests of the four major players in the negotiation process makes it unlikely that the March deadline will be met.
Dr. Acheampong cited recent examples of debt relief negotiations in other jurisdictions, such as Zambia, where there were still issues to be resolved even after China formally agreed to be part of the creditor group with France.
Ghana’s debt relief negotiations are critical to the country’s economic stability, as the West African nation is grappling with a debt-to-GDP ratio of over 70%, high unemployment, and sluggish economic growth. The debt relief program aims to ease the burden of debt repayments, provide some fiscal breathing space, and attract foreign investors.
Ghana has been seeking debt relief since last year when it requested to participate in the G20 Debt Service Suspension Initiative (DSSI), which has provided temporary relief to many low-income countries impacted by the COVID-19 pandemic. However, the country is now seeking a more comprehensive debt relief package that will include restructuring of both its domestic and external debts.
The March deadline set by President Akufo-Addo for the completion of Ghana’s debt relief negotiations and executive board approval is not likely to be met. The negotiations involve four major players, each with their interests, which make it challenging to address all the specific concerns of each party within a short period. Nevertheless, the completion of the negotiations and approval of the debt relief program are crucial to Ghana’s economic stability and its attractiveness to foreign investors.
