An Economist, Dr. Sa-ad Iddrisu has explained that China may be willing to negotiate with Ghana bilaterally regarding its external debt cancellation request.
He said China would not want to participate in the external debt restructuring programme on a multilateral basis, but rather stage negotiations on a bilateral basis with the country in debt in order to lay down its own terms.
“If you take a look at the G20 framework, the debt restructuring under the G20 framework comes with certain instructions which China may not be willing to follow under the circumstances. So if you look at the whole issue, my understanding is that China is willing to deal with the government of Ghana on a bilateral basis. So China to Ghana directly dealing one-on-one on its debt so that China could tell us what it would do with its debt instead of joining other creditors on the table,” he explained.
Ghana’s external debt sums up to $29.2 billion out of which it owes China 14%, making China one of the country’s biggest external creditors.
However, the economist has expressed that Ghana would not be in a strong position to negotiate on a bilateral basis with China, saying that in such a circumstance, the country in debt usually loses some national assets. He cited the case of Sri Lanka where China had to take over and assume 70% shares of the country’s port.
Dr. Iddrisu also indicated that the refusal of China to join other creditors in the external debt restructuring exercise will incur dire consequences on Ghana’s economy.
The domestic exchange programme is a prerequisite activity for an IMF deal in order to revive the struggling economy.
Following this has been a request by the government of Ghana for external creditors to cancel the country’s debt. All other creditors, except China, have shown a willingness to join the exercise.
In view of this, President Akufo-Addo has asked Germany to plead with China on Ghana’s behalf so that the Asian country could cancel the debt.
The German Ambassador to Ghana, Daniel Krull in a statement bemoaned the large size of government which many have pointed out as costly for the country.
According to the diplomat, Ghana’s government size is even bigger than that of his country, Germany which is much bigger in landscape and population.
He has therefore asked the government of Ghana to cut down on its expenditure and government size if it indeed needs Germany’s help in convincing China to cancel its debt
Meanwhile, the Finance Minister, Ken Ofori-Atta at the beginning of the year cautioned that the country is set to crumble should it not be able to obtain an IMF programme by March.
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