Finance Minister leads delegation to China for crucial debt cancellation talks
Ghana is in talks with China to secure debt cancellation with the Paris Club as part of the country’s ambitious restructuring of its external debts.
The country is hoping to restructure $5.7 billion in external debt, with China accounting for a third of that amount, equivalent to $1.7 billion.
The finance minister, Ken Ofori-Atta, is leading the government delegation to China, where he hopes to convince Chinese authorities to accept the debt cancellation proposal.
Mr Ofori-Atta has expressed optimism that a deal can be reached with China, paving the way for Ghana to present its case before the International Monetary Fund (IMF) board.
However, there are concerns about how China will comport itself in the comparability of treatment, given that the country has committed to a bilateral negotiation. Nevertheless, Ofori-Atta remains hopeful that China will envelope as quickly as possible, as it is the big elephant in the room in the restructuring process.
The German Federal Minister for Economic Cooperation, Svenja Schulze, has promised to assist Ghana in getting fair treatment at the Paris Club, which is a group of creditor nations. Ghana owes $1.9 billion to Paris Club members, according to data from the Institute of International Finance (IIF).
Mr Schulze’s commitment to helping Ghana is a significant boost for the country, which is currently restructuring its debt both domestically and externally in order to access support from the IMF.
Ghana’s bilateral lenders are also discussing the formation of an official creditor committee, which is the first step needed to engage in debt relief talks for the country. The Paris Club has contacted other bilateral creditors, such as China and India, to engage in forming the committee and deciding who would chair it.
Furthermore, Ghana became the fourth nation to apply to the common framework platform in January, an initiative of the Group of 20 major economies launched in 2020 to streamline debt restructuring efforts for poorer countries.
The common framework platform is an essential tool for countries like Ghana seeking to restructure their debts in a sustainable and efficient manner.
It is worth noting that China is Ghana’s single biggest bilateral creditor, with $1.7 billion of debt. Therefore, securing China’s agreement to the debt cancellation proposal is vital for Ghana’s debt restructuring efforts. If Ghana’s efforts are successful, it will be a significant boost for the country’s economy, which has been battered by the COVID-19 pandemic.
Ghana’s debt restructuring efforts are vital for the country’s economic recovery and sustainability. The country’s delegation to China represents a crucial step in securing the debt cancellation proposal and achieving sustainable debt levels.
With the support of the Paris Club and Germany, Ghana has a better chance of succeeding in its debt restructuring efforts, paving the way for a brighter future for the country.
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