Ghana has a relatively lower exposure to loans from China compared to Zambia (36%) and Ethiopia (25%), the World Bank has revealed in its April 2024 Africa Pulse Report.

The country accounts for 7.0% of the share of Public and Publicly Guaranteed (PPG) external debt owed to China.

According to the World Bank, the lower exposure to multiple creditors has enabled Ghana and other debt-ravaged countries to reach or be close to reaching agreements with their external creditors.

“In January 2024, the Official Creditor Committee (OCC) reached an agreement in principle with the Government of Ghana on the terms of the treatment of official bilateral debt. Debt restructuring negotiations allowed the International Monetary Fund to conclude financing programmes and the World Bank to provide large positive net flows at highly concessional or grant terms”, it said.

The report continued that many low-income and lower-middle-income countries in Sub-Saharan Africa have accumulated debt burdens—as reflected by their high levels of public debt and increased debt service.

During the past decade, public debt increased rapidly, and the composition of PPG external debt shifted from bilateral creditors to private creditors and non–Paris Club governments.

Consequently, it said the larger share of debt owed to private creditors and non–Paris Club governments has not only complicated debt restructuring negotiations but also raised the debt service burden. High policy rates in advanced economies have also recently further increased interest payments on debts.

For instance, the shift in the composition of debt service from official to private creditors.

Again, interest payments owed by governments to private creditors account for almost 65% to 70% of total PPG external debt interest payments.