Ghana now “begging” for a G20 debt relief programme it rejected in 2020
Ghana is set to request for debt relief via the G20 Common Framework programme, despite its earlier rejection of same in 2020.
The country’s main reason for its earlier rejection of the debt relief programme was a possible loss of market access to the Eurobond market as requesting for the G20 debt relief programme would send “negative signals” to international creditors and imply that Ghana was likely to default on its obligations to creditors.
Reports indicate that, the Government of Ghana had reached out to the Paris Club of creditor countries in December 2022 to ask for assurances that the Common Framework process, set up by the Group of 20 leading economies in 2020 in response to the COVID-19 pandemic, could be expedited.
The reports further indicate that, if the assurances are favourable, the government would quickly sign onto the Common Framework.
According to Reuters, a Paris Club official said the group had received a letter from Ghana’s government, but declined to give further detail.
Another source with knowledge of Ghana’s debt restructuring said it was hard to see any other outcome for Ghana than signing up to the Common Framework as they have left themselves no other options.
A third source, Reuters said, who is familiar with the thinking of the IMF, said Ghana going through the Common Framework programme was under discussion and the most probable outcome, as well as the preferred option for the Paris Club.
Only poorer nations are eligible to request a Common Framework programme. This then lead to an official creditor committee convened and negotiations supported by the International Monetary Fund and the World Bank.
On the other hand, a country aiming to restructure its debt can also do so by negotiating individually with each creditor
The Common Framework, designed to allow for speedy debt reworks, has been widely criticised for its glacial progress.
Chad, Ethiopia and Zambia signed up in early 2021. While Chad secured a deal with creditors in November, Zambia is still locked in talks. Ethiopia’s progress was held up by civil war.
The IMF is likely to lead the charge in the country’s request for a debt relief from the Paris Club through the G20 Common Framework, given the Bretton Woods institution’s assurance to help engage international creditors on the possible cancellation of debts owed by Ghana, and other countries with “distressed debt challenges.”
