Ken Ofori-Atta begins debt restructuring talks with China today
Ghana’s Finance Minister, Ken Ofori-Atta, is leading a delegation from Ghana to engage with representatives of the Chinese government on debt restructuring. The meetings are set to take place from March 23rd to March 24th, 2023, and will also involve technical officials from the Ministry of Finance, Ministry of Foreign Affairs, and the Bank of Ghana. This move comes as Ghana seeks to restructure $5.7 billion of its external debt, with China holding a third of the figure, amounting to $1.7 billion dollars.
The discussions with Chinese officials will focus on bilateral talks on debt restructuring and seeking financial assurances for Ghana’s program with the International Monetary Fund (IMF). It is worth noting that Ghana’s total debt owed to external creditors is pegged at $29.2 billion, with the Eurobonds accounting for $13.1 billion, multilateral accounts for about $8.1 billion, Paris Club countries for $1.9 billion, and other creditors accounting for $3.2 billion.
Given the magnitude of the debt burden, Ghana has been working on securing a deal with the IMF to provide some relief to the country’s fiscal situation. However, to secure the deal, the Ghanaian government needs to pass three revenue bills that are key requirements. The bills are the Income Tax Amendment Bill, the Excise Duty Amendment Bill, and the Growth and Sustainability Amendment Bill, which are expected to generate approximately ¢4 billion annually.
Moreover, Ghana has been negotiating with the Paris Club, a group of major creditor nations, to restructure its debt. The government reports that significant progress has been made on these negotiations. Therefore, the meeting with Chinese officials is critical to Ghana’s debt restructuring plan, and it is hoped that these discussions will yield positive results.
It is worth noting that China has been a significant creditor to many African countries, and Ghana is not an exception. In the past, China has been accused of “debt-trap diplomacy,” where it lends to African countries and makes it challenging for them to repay, thus forcing them to cede strategic assets. However, Mr. Ofori-Atta has maintained that the main focus of the engagement with Chinese officials is not debt cancellation, although the issue will be discussed.
The delegation’s visit to China was scheduled earlier but postponed due to meetings of the National People’s Congress of China. The delegation has also been engaging with officials from the Export-Import Bank of China in Ghana, and Mr. Ofori-Atta has assured the German Finance Minister that China has committed to bilateral negotiations. However, Ghana’s debt restructuring plan faces significant challenges, including the COVID-19 pandemic’s impact on the country’s economy.
Ghana’s delegation led by Ken Ofori-Atta’s visit to China to engage with representatives of the Chinese government on debt restructuring is critical to Ghana’s debt restructuring plan. The discussions will focus on bilateral talks on debt restructuring and seeking financial assurances for Ghana’s program with the IMF. However, Ghana needs to pass three revenue bills, and negotiations with the Paris Club are ongoing. While the outcome of the discussions with Chinese officials remains uncertain, it is hoped that this engagement will yield positive results for Ghana’s economy.
