Kristalina Georgieva, the Managing Director of the International Monetary Fund has appealed to creditor-nations group Paris Club (G20) to quicken the process to restructure Ghana’s debt.
According to the IMF Chief, failure of the G20 countries to speed up the formation of a Creditor Committee for Ghana will further undermine the country’s stability.
“It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia,” the IMF boss made the appeal at the ongoing meeting of the G20 Finance Ministers and Central Bank Governors in Bengaluru, India.
Kristalina Georgieva is fighting for the country which has appealed to the G20 to help it to reorganize its external debt of 382 billion cedis ($29.1 billion).
A creditor committeeee will enable Ghana to formally seek financial assurances from bilateral creditors and gauge their willingness to engage in debt restructuring negotiations.
Ghana is reorganizing its total public debt, estimated at 575 billion cedis, to secure a $3 billion bailout from the IMF. The country completed a domestic debt swap this month after five deadline extensions for bondholders to participate in the exchange.
Kristalina’s appeal comes a day after the German Ambassador to Ghana held an unusual press conference to discuss conditions needed to be met before Paris Club members would agree on a debt relief package for the cocoa producing nation.
Daniel Krull warned that the country’s bailout request with the IMF would be in jeopardy unless China agrees to a joint debt relief package.
“The Big elephant in the room is China. China is the largest creditor to Ghana and so far it is not supportive of setting up of a creditors’ committee, where the creditors will sit down and agree on an aid package for Ghana,” the German diplomat said during the press engagement.
China is Ghana’s biggest bilateral creditor with $1.7 billion of debt, while the country owes $1.9 billion to Paris Club members.
Finance Minister Ken Ofori-Atta has since postponed a visit to Beijing for debt relief talks due to the National People’s Congress of China.
Finance Minister to Propose Debt Swap
While multiple local media reports indicate Ghana is seeking debt cancellation from China, some sources revealed that the finance minister would propose a debt swap when he visits China next month.
Without assurances from creditors, the bailout approval by IMF board would delay, which means the much-needed $3 billion loan would be far from coming.
The programme, which was launched in 2020, was supposed to streamline the process of coordinating among creditor governments the restructuring of low-income countries’ debts after the pandemic.
However, progress has proven glacial for the first cases, a situation Western countries have said is in part due to a lack of restructuring experienced from China, a non-Paris Club G20 creditor that has become a major lender in recent years.
“There is a commitment by the leaders to form the creditor committee, so it’s a question of time. We know that all the G20 members are committed to undertake the debt treatment under the Common Framework,” the Paris Club official.
Forming a creditor committee took a couple of months for previous cases but officials said the Paris Club members were all ready to do so for Ghana and hoped it could be done in a month.
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