Getting buy-in of China for debt cancellation complicated – Lloyd Amoah

Political science lecturer and Director of Asian Studies at the University of Ghana, Dr. Lloyd Amoah is sceptical about the government’s ability to persuade Chinese authorities to forgive its debt as part of Ghana’s debt restructuring programme.

Ken Ofori-Atta, the Finance Minister, is currently in China to request that interest payments be suspended in order for the public debt stock to fall below sustainable levels.

The engagement’s success is critical to securing a $3 billion deal with the International Monetary Fund.

Dr. Llyod Amoah, speaking on Eyewitness News about Ghana’s chances, predicted that the negotiations would be difficult.

“Ghana is an important historical country in West Africa and Africa generally so that might play into the economic cards that are on the table. But it’s hard to say that things will necessarily be in our favour easily. That is to say that what our finance team sells to the Chinese will really count. So, they may have to up their game if they want the Chinese to listen to us and help us restructure the debts that we owe them. So it’s dicey and complicated.”

Ghana, which is struggling with its worst economic crisis in a generation, secured a staff-level agreement with the International Monetary Fund in December for a $3 billion loan, though asking lenders to provide financing assurances is a condition for the IMF’s board to sign off the programme.

China is Ghana’s biggest bilateral creditor with about $1.7 billion of debt.

A Chinese delegation visited Ghana this month for initial debt talks which the finance ministry said were “cordial and fruitful”.

Ghana suspended payments on most of its external debt last year, effectively defaulting, and still needs to negotiate a resolution with its private international bondholders.

Ghana has already restructured its domestic debt and has requested to rework its bilateral debt under the common framework platform supported by the Group of 20 major economies.

An official creditor committee for talks with sovereign creditors is still pending.

Ken Ofori–Atta who left Accra for China on Monday, March 20, with a government delegation is expected to continue bilateral talks with China as well as seek financial assurances for Ghana’s programme with the International Monetary Fund.

The government has thus expressed optimism about a fruitful discussion between the Finance Minister, Ken Ofori-Atta and China on negotiations for debt restructuring.