Ghana: World Bank says low exposure to China debt aided country’s restructuring negotiations
The World Bank Group says Ghana has a relatively lower exposure to loans from China compared to its African peers such as Zambia and Ethiopia.
The Bretton Wood Institution in its April 2024 Africa Pulse Report, noted that Ghana accounts for 7% of the share of Public and Publicly Guaranteed (PPG) external debt owed to China.
This is against the 25% and 36% share of Public and Publicly Guaranteed (PPG) external debt owed to China by Ethiopia and Zambia respectively.
According to the World Bank, Ghana’s lower exposure to China and other creditors has enabled the country to reach or be close to reaching agreements with its external creditors.
“In January 2024, the Official Creditor Committee (OCC) reached an agreement in principle with the Government of Ghana on the terms of the treatment of official bilateral debt. Debt restructuring negotiations allowed the International Monetary Fund to conclude financing programmes and the World Bank to provide large positive net flows at highly concessional or grant terms”, the Word Bank noted.
The report continued that many low-income and lower-middle-income countries in Sub-Saharan Africa have accumulated debt burdens—as reflected by their high levels of public debt and increased debt service.
During the past decade, public debt increased rapidly, and the composition of PPG external debt shifted from bilateral creditors to private creditors and non–Paris Club governments.
Consequently, it said the larger share of debt owed to private creditors and non–Paris Club governments has not only complicated debt restructuring negotiations but also raised the debt service burden.
High policy rates in advanced economies have also recently further increased interest payments on debts owed by low-income countries.
