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German Ambassador: IMF Agreement at Risk if China Refuses Ghana’s Debt Relief Request

German Ambassador: IMF Agreement at Risk if China Refuses Ghana's Debt Relief Request

The German Ambassador to Ghana, Daniel Krull, has issued a warning that the $3 billion bailout being sought by Ghana from the International Monetary Fund (IMF) may not be approved unless China agrees to a debt relief package. Speaking to the media, Mr Krull said that Ghana has attempted to engage China in the setting up of a creditors’ committee to agree on a debt package, but so far, China has rejected these attempts.

President Nana Addo Dankwa Akufo-Addo has urged Germany to encourage China to support Ghana’s debt restructuring efforts. The Finance Minister of Ghana, Ken Ofori-Atta, has disclosed that the high-level meeting with Chinese creditors over Ghana’s debt restructuring has been postponed to late March 2023 due to the upcoming National People’s Congress of China, which is scheduled for early March.

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Mr Krull stated that other creditors would only help if China agreed to the debt relief package. As the largest creditor to Ghana, China must be supportive of setting up a creditors’ committee, where creditors can sit down and agree on an aid package for Ghana. Without this agreement, the IMF package is in severe danger.

Mr Krull called on politicians and MPs who have business relations with China to encourage their Chinese counterparts to agree to the aid package to help rescue Ghana’s economy. He said, “The President and the Finance Ministers have appealed to Germany to support Ghana in convincing China to come to the table, and we are ready to do that. But at the same time, I want to appeal to all Ghanaians who have strong ties to China, who are doing nice business with China to also engage them and convince them that it is time to sit down with all the creditors and agree on a package. Time is of the essence.”

The IMF package is crucial to Ghana’s economic recovery from the COVID-19 pandemic. The country’s economy has been badly hit by the pandemic, which has led to an increase in the country’s debt. The bailout is intended to support Ghana’s economic reform programme to reduce the country’s debt, create jobs and stimulate growth.

Ghana has been seeking support from the international community to reduce its debt burden. In March 2021, the country was granted a debt service relief of about $500 million from the G20 group of countries. However, more support is needed from China, which is the country’s largest creditor.

The debt relief package would allow Ghana to reduce its debt to more manageable levels, which would provide the country with the fiscal space to implement its economic reform programme. This would enable Ghana to reduce its debt-to-GDP ratio, which has risen to about 70%.

In conclusion, the IMF package is critical to Ghana’s economic recovery, and China’s agreement to the debt relief package is essential for the bailout to be approved. The German Ambassador’s warning highlights the urgency of the situation, and it is essential that all stakeholders work together to find a solution to Ghana’s debt problem.

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