Business / Agribusiness Economy

Restructuring Ghana’s Debt: Negotiations with China Rescheduled for Third Week of March

Restructuring Ghana's Debt: Negotiations with China Rescheduled for Third Week of March

Restructuring Ghana’s Debt: Negotiations with China Rescheduled for Third Week of March

The Ghanaian government has announced the postponement of its high-level delegation to China until March 2023, due to the upcoming National People’s Congress meeting scheduled for early March. However, bilateral talks between the two countries will continue ahead of the mission.

The government is seeking debt forgiveness from bilateral and multilateral partners under the G20 Common Framework for Debt Treatment, with China being a key creditor. Ghana owes China over $1.7 billion, compared to $1.9 billion to other Paris Club members.

In January 2023, Ghana became the fourth country to seek treatment under the Common Framework, as confirmed by the Managing Director of the IMF, Kristalina Georgieva. This highlights the importance of the pathway for debt resolution.

The postponement of the high-level delegation to China may be a setback, but it allows more time for Ghana to pursue its debt relief agenda. The country has been grappling with high levels of debt, and the COVID-19 pandemic has only worsened the situation. Therefore, it is crucial for Ghana to obtain debt relief in order to free up resources for economic development and social welfare programs.

Finance Minister, Ken Ofori-Atta
Finance Minister, Ken Ofori-Atta

The government is taking proactive measures to address the debt issue, including improving tax revenue collection, reducing expenditure, and pursuing debt relief from bilateral and multilateral partners. The G20 Common Framework for Debt Treatment provides a platform for debtor countries to negotiate debt relief with their creditors.

China has been a major creditor to African countries, including Ghana, in recent years. However, China has been criticized for its debt-trap diplomacy, where it extends loans to developing countries for infrastructure projects and then uses the debt as leverage to gain strategic and political influence. Therefore, Ghana’s debt to China has raised concerns about its sovereignty and the potential impact on its foreign policy.

Ghana’s pursuit of debt relief from China is therefore not only an economic issue but also a geopolitical one. It is important for Ghana to maintain a balanced relationship with China while safeguarding its national interests.

The postponement of the high-level delegation to China may also provide an opportunity for Ghana to engage with other creditors, such as the Paris Club members. The Paris Club is an informal group of creditor countries that negotiate debt relief with debtor countries. Ghana’s debt to Paris Club members is slightly higher than its debt to China, and therefore engaging with them could also yield significant debt relief.

Overall, the postponement of the high-level delegation to China is a setback for Ghana, but it provides more time for the country to pursue debt relief from other creditors and to continue bilateral talks with China. The G20 Common Framework for Debt Treatment is a positive development for debtor countries like Ghana, and it is hoped that it will lead to significant debt relief and sustainable economic growth.

 

 

 

 

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