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Debt Cancellation: Ghana’s Loan Is Commercial, Consider Debt Restructuring Rather Than Cancellation-  Hlovor To GoG

M.Cby M.C
March 2, 2023
Reading Time: 4 mins read
M.Cby M.C
in Economics, Economy, Sub Top Stories, Sub Top Stories1
0
Debt Cancellation: Ghana’s Loan Is Commercial, Consider Debt Restructuring Rather Than Cancellation-  Hlovor To GoG

Ghana's debt cancellation

Ishmael Kwablah Hlovor, International Relations Expert has urged the Government of Ghana (GoG) to focus on debt restructuring as it proceeds with its negotiations with China rather than pursuing debt cancellation.

According to the International Relations Expert, Ghana can only go ahead with debt cancellation with its external creditors if the loan acquired were ‘zero-interest’ kind. However, since it is not but rather is a commercial loan with interest, the country should instead consider pursuing debt restructuring rather than thinking about asking for a debt cancellation.

“One of the things about the Chinese’ financing is that, it is quite easy for them if it is this zero-interest rate loans, that they quickly write off. But once it comes to the commercial lending, we must understand that, China is itself now trying to learn how to deal with this debt restructuring because they have not been lenders for that long.

Debt
Ghana urged to pursue debt restructuring instead of debt cancellation

“It is a new process for them to deal with countries that have taken money from them and are in this sort of crisis so they normally go gradually because, by principle, they say; ‘you cross the river by touching the stone’…It is an experiment for them. One of the things that has worked to our advantage now is the fact that, China doesn’t want to look like that international archer that is virtually derailing international efforts at getting debt relief for poorer nations.”

Hlovor

Mr. Hlovor, however, thinks that it will still take some time to come to an agreement with China because much of Ghana’s loan was acquired through commercial lending.

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“So we may look at restructuring rather than debt forgiveness. When we look at what they have done to Colombia, they(China) gave them a 2-year moratorium, where they froze interest on their loans. So we may be looking at those kinds of dynamics. But of course, it also looks at the kind of demand we put on the table and the things that we are ready to take on ourselves. That’s very important too in this discussion.”

Hlovor
debt 1
Ghana may look at restructuring rather than debt forgiveness

Mr. Hlovor said the new developments of Ghana’s interactions with China following the visit of the country’s Exim Bank to Ghana shows that the relationship between the two countries is still very strong and thinks the visit of the Asian economic giant is a good note for Ghana.

This, he said rules out the complexities involved in engaging the external creditor, recalling that as the reason for Ghana requesting the assistance of its international friends to aid the interaction process.

Losing critical installations in Ghana will depend on negotiation terms

Ghana, according to Mr. Hlovor, may not stand the risk of losing its critical installations if it doesn’t include that in its deal with China.

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This, he said while responding to his thoughts about Ghana’s negotiation with China resulting in the country losing some critical installations, as has been observed to be the case of some countries who found themselves in a similar economic crisis.

“I don’t think we should expect that because in those instances, it is because those critical installations were actually part of the bigger deals that they signed, and that allowed them to take over in these cases of default.

31202340113 i41p266gfa thumbnail
China’s Exim Bank’s Visit to Ghana

“If you look at some of those cases where they had to go for critical installations, already, they were part of the processes to collecting revenue. So in that case, it becomes like a trade off kind of deal. But this situation appears more complex than that because, it’s a general problem across the third world. Remember Zambia is also having its own tough time with the Chinese. Sri Lanka had their own tough time. Therefore, it’s not as easy as we say; that if we default, the Chinese are coming to take over critical installation.”

Hlovor

Mr. Hlovor emphasized on the fact that, China will only take over critical installations in Ghana, depending on how the negotiations between the two countries turns out.

READ ALSO: Momentum Stays Weak at Ghana Stock Market

Tags: Critial Installationsdebt cancellationExternal Debt RestructuringghanaIshmael Kwablah HlovorKen ofori-attaNana Addo Dankwa Akufo-Addo
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