By: ignewssDesk
Ghana has requested debt relief from its largest bilateral creditor, China, under the G20 Common Framework for debt resolution, according to the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva.
The West African country is seeking to restructure its external debt of $28 billion, with China holding $1.7 billion of that debt.
Ghana’s debt has grown in recent years as China has loaned more than $17 billion to the country for infrastructure projects.
However, China has recently forgiven loans worth billions of dollars for 17 African countries, raising questions about whether it will be willing to do the same for Ghana.
The government of Ghana has extended the deadline for its Domestic Debt Exchange program to January 31, 2022, and Finance Minister Ken Ofori-Atta has emphasized the importance of stakeholder consultation with individual and institutional investors in the process.
The IMF’s Georgieva has stated that countries seeking debt restructuring under the Framework will need greater certainty on processes and standards, as well as shorter and more predictable timelines.
Senior Lecturer at the University of Ghana Business School, Professor Godfred Bokpin, has advised the government to extensively engage external creditors in its debt restructuring program, as failure to do so could lead to complications for the country.
He also noted that external creditors are likely to strongly oppose any debt restructuring program that has not been extensively discussed with them.
As Ghana negotiates with external creditors, including China and major global asset managers such as BlackRock and PIMCO, the question remains whether they will accept a debt restructuring program from the government.
The outcome may depend on how favourable the program is seen by the creditors, and any unfavourable terms could negatively impact Ghana’s ability to raise long-term capital in the international debt market.
Source: norvanreports