Concerning the restructuring of Ghana’s debt, all member countries of the G20 group of economic powers, alongside Paris Club members have agreed to come on board to take the first step towards forming a creditor committee.
Ghana last week requested a restructuring of debt it owes to other governments, becoming the fourth country after Chad, Ethiopia and Zambia to do so under a G20 Common Framework.
The programme, which was launched in 2020, was with the motive to streamline the process of coordinating among creditor governments concerning the restructuring of low-income countries’ debts after the pandemic.
Nevertheless, progress has proven glacial for the first cases, a situation where a Western country said it was in part due to a lack of restructuring experience from China, a non-Paris Club G20 creditor that has become a major lender in recent years.
A Paris Club Official during an interview disclosed that there is a commitment by the leaders to form the creditor committee, ‘so it is a question of time,’ he said
“We know that all the G20 members are committed to undertake the debt treatment under the Common Framework.”
One Paris Club official
According to the official, Ghana’s case was less complex than Zambia whose case was progressing after struggling since it became the first African country to default after the pandemic.
“We think that the process will become smoother and smoother on the basis of the previous cases. Ghana’s authorities had sought assurances its case would be dealt with in a ‘timely manner’.”
One Paris Club official
Finance Minister Reveals Government’s Plans To Re-profile External Debt With G20 Members
Speaking on government’s current line of actions, the Finance Minister, Ken Ofori-Atta has disclosed government’s plans to re-profile Ghana’s debt with the G20 countries rather than seek an outright cancelation.
There have been numerous criticisms concerning Government’s request to the Paris Club of International Creditors for debt cancelation.
Some analysts have argued that the request could encourage government to engage in reckless borrowing if it is granted.
Speaking during an interview, the finance minister disagreed with criticisms and contradictory statements made by analysts, divulging that the Paris Club members are always open for issues relating to debt restructuring and/or relief.
“Paris Club is not necessarily debt cancellation but re-profiling of the debt. Basically, we are now talking about the float to look at the interest rate and the maturity period so that we can ensure that it does not exert any undue influence on us.”
Ken Ofori-Atta
According to him, the issue about debt relief and debt cancellation is a second item that government would have to confront with relevant stakeholders.
Highlighting more on government’s re-profiling plans and DDEP, he pointed out that government is dealing with a twin challenge where it is engaging domestic creditors as well as international creditors.
“We have the debt domestic programme. The plan is to reduce our interest burdens and move towards 25 percent. We have the Paris Club and other countries programme which helps smoothen out the needs for payment.”
Mr. Ken Ofori Atta
Not limited to that, Mr. Ofori-Atta further stipulated that it is significant to work at attaining a sustainable debt reduction both domestic and external to propel the country towards economic expansion.
“A combination of all of that leads us to the target so that’s why we are talking about 55percent debt to GDP and 18 percent debt service over revenue.”
Mr. Ken Ofori-Atta
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