A lecturer at the University of Ghana Business School, Professor Godfred Bokpin, has rejected claims that Ghana’s quest for an International Monetary Fund (IMF) deal will collapse if China fails to cancel its debt.
Despite making such an assertion, he however suggested that, the government of Ghana, must strategically cooperate with China on the debt cancellation move in order not to mar the relationship between the two countries beyond the IMF deal.
The German Ambassador to Ghana, Daniel Krull, alleged that the $3 billion bailout being sought from the International Monetary Fund is in danger of not being approved if China fails to agree to a debt relief package.
In an interview on the Eyewitness News with Selorm Adonoo, the Economist said, “Ghana’s indebtedness to China, the external debt from the current composition dimension, is not so big. So as to say that if we fail to receive debt forgiveness from China, that is the end for Ghana, no”.
Professor Bokpin added, “value slightly around 4% of our total external debt, or you put it roughly maybe around $1.7billion or even a little more than that. You know this is not extraordinary, but then if you look at that amount, relative to the Paris Club creditors made up of these powerful countries, Germany, Japan, UK, France, US and the rest of them. You can see that China is a big player as a single country and their level of exposure to Ghana. China is a big player on the continent and therefore their cooperation is key. That is why we need a proper strategy in getting China to cooperate”.
Professor Bokpin said the ongoing discussion on the debt relief package fuelled by global geopolitics put China in a bad light and needs to be managed well by the government.
“I think that the current discussion and approach put China in a certain bad light, which I think is not good. This may also be fuelled by global geopolitics as elevated by Russia’s invasion of Ukraine and China’s posture and then Ghana’s posture with respect to the Russia-Ukraine conflict.
“Ghana is leaning more towards the West, which already will send some signals, so we have to find a better way of cooperating along this line, than probably blaming everything on China. China needs to be treated with respect,” the UG lecturer opined.
Background
Ghana’s total public debt stock has shot up to GH¢575.7 billion at the end of November 2022, according to new data released by the Bank of Ghana.
The new debt figure brings Ghana’s debt to Gross Domestic Product (GDP) ratio to 93.5% from 75.9% in September 2022.
The Bank of Ghana’s January 2023 economic and financial data summary revealed that the debt stock increased by GH¢108.3 billion between September and November 2021.
The external component of the country’s public debt shot up to GH¢382.7 billion in November 2022, equivalent to 62.1% of GDP.
Ghana is seeking to secure an IMF bailout by mid-March as part of its debt restructuring.
The government is also seeking under the G20 Common Framework for Debt Treatment to get debt forgiveness from some bilateral and multilateral partners.
China and its agencies hold about $1.7 billion of Ghana’s $5.5 billion bilateral debt and the specialised nature of their lending windows means that Ghana cannot add them to the model used to negotiate with the G20 and the Paris Club members.
Government has urged Germany to “encourage” China, an ad hoc member of the Paris Club, to support Ghana’s debt restructuring efforts.
