Finance Minister Ken Ofori Atta has left for China to have negotiations on debt restructuring with the Chinese government.
The Minister who is leading the government delegation is expected to continue bilateral talks with China as well as seek financial assurances for Ghana’s programme with the International Monetary Fund.
The trip was postponed to the end of March because it coincided with the National People’s Congress of China meeting in early March 2023.
In an earlier meeting with the German Finance Minister, Mr Ofori-Atta stated that China had agreed to bilateral negotiations and he expressed hope that an agreement could be reached to allow the government to present its case before the IMF Board.
Importance of Finance Minister Ken Ofori-Atta’s Visit to China
According to government sources, the Finance Minister’s trip to China brings the IMF Board’s acceptance of the government programme one step closer. Mr Ofori-Atta had stated in a previous interview with Joy Business, that the government is seeking to restructure the nation’s debt with its external creditors, notably China, and then find ways to secure their agreements to cancel Ghana’s debt.
Why A Debt Restructure?
A successful debt restructuring will greatly improve Ghana’s chances of securing an IMF deal. The government of Ghana is expecting to restructure a total of $5. 7 billion of its external debt of which China’s debt is $1.7 billion; Eurobonds, $13.1 billion and Multilateral, $8.1. This represents a third of the external debt. The remaining debt is made up of Paris Club nations ($1.9 billion) and other creditors ($3.2 billion).
What Next?
The government seems to be doing everything possible to secure an IMF deal. Negotiations for an IMF-supported programme began in late September last year when the country was in a dire economic crisis. A staff-level agreement was achieved in December 2022 by the Ghanaian government and the IMF on a new three-year agreement under the Extended Credit Facility (ECF) of around US$3 billion which will support economic policies and reforms.
What happens if the Finance Minister fails to secure a debt restructuring from our external creditors? Will that also mean no IMF deal for Ghana?
The government should stop putting its eggs in one basket and explore other internal measures to rescue the country from the current economic downturn. It should learn from the experience of the E-levy which was hailed by the government as the only possible means to revive the economy but failed because the government did not meet its expected targets in terms of revenue. Our leaders must be forward-looking and stop begging all the time.
Priscilla Fumadorh
Priscilla is an entrepreneur and a creative communicator who loves to communicate through writing. She is passionate about national economic issues and does not miss a chance to offer her opinions on them for the good of the country.