China pledges support for Ghana’s debt treatment

Chinese authorities have expressed their willingness to support Ghana’s current short-term liquidity challenges.

The Asian country has also pledged to continue to support Ghana’s medium and long-term developmental aspirations.

The Chinese Finance Minister Liu Kun gave the assurance when Ghana’s Finance Minister, Ken Ofori-Atta led a delegation to engage China over a $1.7 billion debt.

“China believes in promoting debt sustainability and sustainable development,” Liu Kun, said.

He added “we know that these are short-term challenges which we as responsible creditors remain committed to resolving. The long-standing and prosperous relationship between Ghana and China imposes on us, a responsibility to help”.

“Chinese authorities have confidence in Ghana’s economic management and its long-term economic viability.”

The finance minister informed his Chinese counterpart that Ghana’s Fund programme required steep fiscal adjustments, debt restructuring, and financing assurances.

He mentioned that the country had just gone through a painful but necessary Domestic Debt Exchange Programme, with an 85 per cent participation rate, which he said, was a demonstration of the country’s preparedness to take the necessary action to readjust its fiscal path.

Last week Ghana’s Finance Minister revealed that conversations with China over Ghana’s debt have been positive and encouraging.

Mr 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.

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

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.