Debt Restructuring: Deliberations with China fruitful – Ofori-Atta says
The Government of Ghana has been engaged in discussions with the Chinese delegation from EXIM Bank China over the restructuring of Ghana’s $1.7 billion indebtedness to China. According to a statement by the Ministry of Finance, the discussions have been highly cordial and fruitful, and the two governments have exchanged data on the parameters of an effective debt treatment.
The Ghanaian government is seeking several reliefs, including an extension of the moratorium on debt servicing, an extension of maturities, and lower interest rates. The negotiations are being held at the technical level, and the government is expected to send a high-level delegation to China in late March 2023 to continue discussions.
The Chinese delegation ended a three-day mission to engage with the Ghanaian government, during which they met with Vice-President Dr. Mahamudu Bawumia, the Minister of Finance, and technical teams from the Ministry of Finance. The Chinese Ambassador to Ghana, Lu Kun, also hosted the delegation at a luncheon, which was attended by members of the Chinese delegation, the Minister of Finance, the Minister of Foreign Affairs, Ghana’s Ambassador to China, and officials from the Ministry of Finance.
Speaking at the luncheon, Finance Minister Ken Ofori-Atta expressed his gratitude to the Chinese government for their long-standing cooperation and support for Ghana. He emphasized the need to strengthen the relationship between the two countries while working towards an exemplary debt treatment solution that could serve as a model for China’s future engagements with other African countries.
The negotiations between Ghana and China are part of a broader trend in which African countries are seeking debt relief from China. According to a report by the China Africa Research Initiative at Johns Hopkins University, China is the largest bilateral creditor to African countries, with loans totaling more than $150 billion. Many African countries are struggling to repay these loans, leading to concerns about debt sustainability and the risk of default.
The Chinese government has shown some willingness to work with African countries on debt relief. In 2020, the Chinese government announced that it would participate in the G20 Debt Service Suspension Initiative (DSSI), which provides debt service relief to low-income countries affected by the COVID-19 pandemic. However, the DSSI does not cover all Chinese loans to African countries, and many African countries are still struggling with high levels of debt.
The negotiations between Ghana and China will be closely watched by other African countries that are seeking debt relief from China. The outcome of these negotiations could set a precedent for other countries and could have significant implications for the future of China’s engagement with Africa. As China seeks to expand its economic and geopolitical influence in Africa, its approach to debt relief and sustainability will be a critical factor in shaping its relationships with African countries.
