Reduce size of Gov’t – German Ambassador tells Akufo-Addo as he warns of severe danger to IMF package
Ghana’s talks with the International Monetary Fund (IMF) for a bailout are in danger due to China’s reluctance to engage in possible debt relief, according to the German Ambassador to Ghana, Daniel Krull. China is Ghana’s largest creditor, and its support is crucial in setting up a creditors’ committee to agree on a package for Ghana. Without this agreement with the bilateral creditors, the IMF package is at severe risk.
Ghana’s external debt has been rising rapidly in recent years, and the COVID-19 pandemic has only worsened the situation. The country’s debt-to-GDP ratio rose to 76.1% in 2020, up from 62.4% in 2016. The IMF has been in talks with Ghana since last year to provide a $1 billion bailout package to help the country manage its debt burden.
However, the IMF package is contingent on Ghana restructuring its external debt with its creditors, including China. The German Ambassador’s warning highlights the challenges Ghana faces in securing debt relief from China, which has become a major creditor to many African countries in recent years.
China’s reluctance to engage in debt relief could be due to concerns about setting a precedent for other countries seeking similar relief. China has been criticized for its lending practices, which often involve providing loans to countries for infrastructure projects that are not financially viable. This has led to a surge in debt for many African countries, including Ghana.
Ghana’s government has postponed its meeting with China on debt cancellation to late March 2023, following the upcoming National People’s Congress of China meeting scheduled for early March. The postponement highlights the challenges Ghana faces in securing debt relief from China, which has become an increasingly important source of financing for the country.
Germany has expressed its willingness to assist Ghana in securing debt relief, but it remains to be seen how effective its efforts will be in persuading China to come to the table. The situation highlights the challenges African countries face in managing their debt burdens, which have become increasingly unsustainable in recent years.
Ghana’s talks with the IMF for a bailout are in danger due to China’s reluctance to engage in possible debt relief. The situation highlights the challenges African countries face in managing their debt burdens and securing debt relief from China, which has become a major creditor to many countries in the region. The postponement of Ghana’s meeting with China on debt cancellation underscores the challenges the country faces in securing debt relief, and Germany’s willingness to assist highlights the international community’s growing concern over Africa’s debt crisis.
Meanwhile, the German Ambassador has criticized the bloated size of the government, asserting the country’s government size is bigger than his.
The German Ambassador has therefore called for a reduction in the size of government as a means of cutting down its expenditure as it tries to secure an IMF programme as well as court support from other countries such as Germany in resolving its debt crisis.
“I cannot go to the international community saying I need but I am not willing to cut down my budget expenditure,” quipped the German Ambassador.
