US to push for 'speedy' action on debt relief for Ghana

US to push for ‘speedy’ action on debt relief for Ghana

The United States Treasury Secretary Janet Yellen will push for immediate action on requests by Ghana and Zambia for restructuring their sovereign debts during the 2023 Spring Meetings of the International Monetary Fund (IMF) and the World Bank this week. 

“During the week, Secretary Yellen will also maintain urgency for the speedy resolution of Common Framework cases like Zambia and Ghana to remove debt overhangs and foster growth in developing countries.  She will also stress the importance of concluding the debt treatment for Sri Lanka,” the Treasury said in a press release on Monday.

Ms Yellen will also advocate for speeding up the debt relief process and making it more transparent, according to the US Treasury. 

A Treasury official said that it was uncertain whether there will be progress on Zambia’s request this week, as it depends on China.

Yellen will discuss the debt issue with officials from the G20 group of major economies and the Global Sovereign Debt Roundtable separately. 

A record number of developing nations are at risk of a debt crisis due to inflation, borrowing costs, the Russia-Ukraine war and a strong dollar.

Ghana’s President Nana Addo Dankwa Akufo-Addo was optimistic about concluding the ongoing negotiations with the International Monetary Fund (IMF) to get the support of the fund last March.

However, some critics including the Minority in Parliament have stated that the deal has not been concluded because the government has not been able to satisfy the financing assurances regarding the $3 billion IMF bailout.

The disclosure of US support comes after US Vice President Kamala Harris visited Ghana and held talks with President Akufo-Addo last month.

During her visit, it was announced that the Department of Treasury’s Office of Technical Assistance (OTA) will deploy a full-time resident advisor to assist Ghana’s Ministry of Finance to develop and execute medium-to-long-term reforms needed to improve debt sustainability and support a competitive, dynamic government debt market.

The project, according to the US will complement and build on the Government of Ghana’s debt restructuring efforts.

She further disclosed at a joint press briefing with President Akufo-Addo that the US will intervene on Ghana’s behalf with the Paris Club as the country seeks debt forgiveness as part of the IMF’s balance of payment support.

According to Mrs Harris, the US will help Ghana with all the support it needs to ensure that it scales through its current economic crisis.

“We welcome Ghana’s commitment to reform its economy for sustainable and inclusive growth. We support Ghana’s engagement with the IMF, and we will continue to push all bilateral creditors to provide meaningful debt reduction for countries that need it.

“It is critical to do so to build long-term economic growth and prosperity and to increase US investments. Our partnership is already strong, and I believe that today we have strengthened it.”