China to seek proper resolution with Ghana over $1.7bn debt

China would like to enhance communications with Ghana to seek a proper resolution of Ghana’s debt issue, its foreign ministry said on Thursday, March 23.

Spokesperson Wang Wenbin made the remark in response to a question on Ghana’s finance minister visiting Beijing for a proposed restructuring of Ghana’s debt.

Ghana’s finance minister Ken Ofori-Atta travelled to Beijing on Wednesday to meet Chinese officials to discuss a proposed restructuring of Ghana’s debt, according to a source with knowledge of the talks.

“The talks are expected to focus on ways to reduce Ghana’s debt burden and secure additional financing assurances for the country’s economic programme,” the source said, asking not to be named because the talks are private.

Ghana, which is struggling with its worst economic crisis in a generation, secured a staff-level agreement with the International Monetary Fund (IMF) 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.

The government’s current priority is to secure IMF board approval, with the fine details of debt treatment operations to follow later, the source added. The meetings will take place on Thursday and Friday.

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.