The Deputy Ranking Member of Parliament’s Finance Committee, Isaac Adongo has stated that Ghana’s request for debt forgiveness from China is unlikely to be successful due to China’s current economic and geopolitical stance.
In a radio interview with Citi FM last Friday, Mr Adongo explained that China’s political and economic ideology is not compatible with the Paris Club’s conditions, which complicates any potential debt relief.
Furthermore, Mr Adongo noted that Ghana’s timing in engaging with China is unfavourable as other African countries are also seeking help from the same source.
He explained that whatever China agrees with Ghana must also be fair to the other African countries seeking assistance.
Finally, Adongo expressed disappointment with Ghana’s lack of progress in achieving debt sustainability, despite the government’s efforts to reduce the nation’s debt stock through its domestic debt exchange program.
He lamented China’s reluctance to forgive debts, stating that they do not believe a sovereign country can be poor, only broke, and they expect countries to use their assets and other means to collect their money.
He said: “We need our friendly nations and the bilateral countries to come together and form a committee, but it has been difficult to get China to come to the table even though China is our biggest bilateral lender. The complexity of the China situation is that there are some bits of geopolitics involved where China does not see the Paris Club as anything other than a Western influence and would always want to have equal arrangements with individual countries.
“Unfortunately for us, we have arrived in China at a time when other African countries are already queueing to borrow from them and so it will be difficult for Ghana to jump that queue because whatever China agrees with Ghana will have to be fair with the other countries we came to meet. And also, traditionally, China does not believe that a sovereign country can be poor but does believe that a country can be broke like we are broke but have assets and other means through which they can collect their money and so China is not a believer of forgiving debts.”
Ghana, which is struggling with an economic crisis, wants to restructure $1.9 billion of the debt it owes China.
The country also secured a staff-level agreement with the IMF in December for a $3 billion loan, but the money’s approval is contingent on it restructuring its debt of 575.7 billion cedis.
Ghana’s external debt was $29.2 billion at the end of November 2022, according to central bank data.
China’s official bilateral loans involving Ghana account for less than 5% of the West African country’s total debt, the Chinese foreign ministry said on Thursday.