Ghana’s International creditors have requested to be given Ghana’s full debt composition so as to guide the credit committees review and decision on whether to approve cancellation of the country’s debt.
The Paris Club creditors committee is currently reviewing Ghana’s request for debt reprofiling and potential cancellation, and this is the most recent update on the matter.
The committee is seeking detailed information about the loans Ghana has taken from other countries to aid in reconciling the numbers before making any decisions moving forward.
This development may provide insight into Ghana’s level of indebtedness to the members of the G20 developed countries.
A framework – the G20 Framework, has been established by the International Monetary Fund (IMF) to provide full support for countries that have requested debt cancellation.
There is a possibility that Ghana’s Finance Minister, Ken Ofori-Atta’s goal of reaching a deal with the Paris Club for debt cancellation by February’s end may be achieved if the government is able to successfully address this challenge.
Securing this deal may also assist Ghana in obtaining approval from the IMF board for a program aimed at reviving the country’s economy.
Dr. Mark Assibey Yeboah, a former Chair of the Finance Committee in Ghana’s parliament, is advocating that renegotiating debt reduction levels with the IMF may be the best course of action for the government at this time.
This proposal comes after difficulties in reaching agreements with individual bondholders and other parties, raising concerns that it could jeopardize the country’s program approval with the IMF board.
In this vein, Dr. Yeboah in his address urged the government to act quickly to address the situation.
“On the revenue front, I think we’ve increased VAT which seeks to bring some revenues from Property rate and the like, tightening a few things. So we’ve masked out, if you like, on the revenue front but there are expenditure controls we could rationalize a bit over there but the savings thereof will not be huge, maybe GH¢5billion if we go full throttle.
“Go to the IMF and tell them that the negotiations we did in October which said that Debt-to-GDP ratio should come down to 15%, debt service of 18%, we cannot meet those because we cannot carry out measures which will bring difficulties on our people. We have to put a human face to the debt restructuring.”
Dr. Mark Yeboah
Prior to this, The Finance Minister, Ken Ofori-Atta assured Ghanaians that the government will work at attaining a sustainable debt reduction both domestically and externally to propel the country towards economic expansion.
This he said will be driven towards attaining IMF’s debt-to-GDP and debt service targets for the country.
“A combination of all of that leads us to the target so that’s why we are talking about 55percent debt to GDP and 18 percent debt service over revenue.”
Government Demands More Despite Promising to Reduce Debt Domestically
Instead of the debt reduction promised the citizenry, the government seems to be demanding more from the people from its new programme – the Domestic Debt Exchange (DDE), as individual bondholders still demand to be totally exempted from the programme.
Despite government’s indifference to their request of being exempted, the bondholders have reaffirmed their position of being totally excluded from the programme.
“Unlike the banks and other institutions who are set to benefit from various regulatory incentives, Individual Bondholders have no fall back nor incentives and will be condemned to shackled penury.
“Proverbs 14:31 says; whoever oppresses a poor man insults his Maker, but he who is generous to the needy honors the Lord. May our government be honored.”