Some economic analysts in Ghana have described the Asian economic giant as the King maker in the re-profiling of Ghana’s debt or possible cancellation of debt from its international creditors.
This is because many of these analysts think China seems to have the final say in making the restructuring of Ghana’s external debt a success. Well, does this send out a good signal to the other international creditors of the country? This could extend Ghana’s negotiation with these creditors, who may be thinking they come secondary on government of Ghana’s debt cancellation priority list, hence, may further delay the acquisition of Ghana’s bailout loan from the IMF.
Meanwhile, some of Ghana’s international creditors have argued that it is critical China comes on board to fully participate in Ghana’s debt exchange programme. However, due to the recent stance of the country, which some have described as foot dragging, some of these creditors in Europe now want to wait for the outcome of Ghana’s negotiation with China.
This is because some of these European countries that are members of the Paris Club and G20 do not want to cancel government’s debts so that it could be used to service China’s debt.
This development has resulted in some being worried that this foot dragging could affect efforts to get the commitment of the external creditors on time for Ghana to secure its deal with the International Monetary Fund (IMF).
Prior to this, there was a strong push for all the external creditors to be treated the same. So if China decides not to participate in any possible debt cancellation, then the other countries could also get out. Some have also argued that based on these developments, China indeed will be the kingmaker in all these negotiations.
In the meantime, the IMF stated that it is just looking out for commitment to participate in this programme rather than firm agreement about debt cancellation. Is this a good news for Ghana and what does this comment from the Fund suggest?
The latest development for Ghana described as a good one
Finance Lecturer at the University of Ghana Business School, Dr. Benjamin Amoah, though, described the latest development as a good one for Ghana.
“Reaching a deal with the IMF was going to be difficult. So if we are now hearing from the IMF, yes indeed creditors must come clear on their position on the debt.
“That notwithstanding, the IMF has still given us a good case and I think it is indeed a great relief that yes, the creditors matter. But the IMF that is at the center or core of all these discussions, is still considering and is very interested in getting Ghana to get the deal come on board so we can get the economy back on track. So it is a good relief.”
Dr. Amoah
According to Dr. Amoah, the discussions so far seem to be a more flexible one because in his opinion, it is the IMF that is providing that level of assurance.
“If you look at what we are going to get, we are seeking the funds for the support from IMF. On the other hand, IMF and the World Bank are not the only creditors of Ghana. We are talking about a debt restructuring, where there must be burden sharing.”
Dr. Amoah
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