Ghana courts China, India support over external debt restructuring

The Government says it is engaging two eminent creditors, China and India, to ensure that Ghana’s external debt restructuring programme is fast-tracked after a successful Domestic Debt Exchange Programme (DDEP). 

Briefing Members of Parliament (MPs) on the DDEP on Thursday, Mr Ken Ofori-Atta, Finance Minister, said the Government had started the process of “negotiating in good faith” with Ghana’s external creditors for a debt treatment. 

He added that, “We are also approaching major creditors like China and India to ensure that our discussions with the Paris Club is accelerated.” 

The Minister noted that members of the Paris Club and Non-Paris Club had indicated commitment to establish a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework by the end of February, 2023. 

He said, “We hope our commercial creditors will understand our desire to negotiate with our bilateral creditor’s softer terms than the ones we anticipate to propose to them, as a speedy process with the bilateral creditors is needed to pave the way for the discussions with private creditors.”  

Mr Ofori-Atta said that such a move formed part of a broader Government response strategy for addressing the current economic challenges and securing an IMF programme to boost confidence in the economy. 

With Ghana at a high risk of debt distress and its debt being unsustainable, the Minister said the Government would complement debt restructuring efforts with domestic mobilisation enhancement. 

A 2022 Debt Sustainability Analysis (DSA) showed that public debt was 103 percent of Gross Domestic Product (GDP) compared to the debt sustainability limit of 55 per cent for countries with medium debt-carrying capacity like Ghana. 

He, therefore, called on the MPs, to, as a matter of urgency, pass three revenue mobilisation bills to support Ghana’s debt sustainability efforts to reduce the debt to 55 per cent by 2028. 

They are – Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, which are outstanding in the House.

The Minister said the passage of those Bills would enable the Government to complete four of five agreed Prior Actions in the Staff Level Agreement since Tariff adjustment by the PURC, Publication of the Auditor-General’s Report on COVID-19 Spending, and Onboarding of GETFUND, DACF and Road Fund on the GIFMIS were completed.  

Mr Ofori-Atta said: “I cannot emphasise enough, the need to secure the Board Approval for our IMF programme by the end of March, 2023. I therefore entreat the House to prioritise the approval of the outstanding Revenue Bills and the various concessional facilities.”  

Already, Germany, the second largest bilateral creditor to Ghana (only after China) has indicated its readiness to support Ghana in its ongoing debt restructuring process. 

“I’m completely aware that you’re suffering from severe economic situation and Germany is supportive. We’re expecting a Creditors Committee to negotiate and consider what can be done to relief the burden and return to economic growth in Ghana,” Mr Christian Lindner, Finance Minister of Germany said during a recent visit to Ghana.