China’s foreign ministry has said it would like to enhance communications with Ghana in order to seek a proper resolution of Ghana’s debt issue.
The remarks came in response to a question on Ghana’s finance minister visiting Beijing for a proposed restructuring of Ghana’s debt.
Ghana’s finance minister, Ken Ofori-Atta, left for Beijing on Wednesday to meet with Chinese officials to discuss a proposed restructuring of Ghana’s debt.
The country is currently struggling with its worst economic crisis in a generation and has secured a staff-level agreement with the International Monetary Fund (IMF) in December for a $3 billion loan.
China is Ghana’s biggest bilateral creditor with about $1.7 billion in debt. According to Ghana’s Finance Ministry, the country’s total debt stands at $38.9 billion, with external debt accounting for about $28 billion.
The discussions between Ghana and China are significant given the latter’s large investments in the African country’s infrastructure, including the construction of a railway line, a gas pipeline, and the expansion of the Kotoka International Airport.
In a statement, Ghana’s Ministry of Finance said that it has approached China to restructure its debt and extend the repayment period, citing the adverse impact of the COVID-19 pandemic on the country’s economy.
China has been receptive to Ghana’s request for debt relief, providing a six-month debt moratorium last year to help ease the economic impact of the pandemic.
Ghana has also received debt relief from the G-20 nations and the IMF, but the country’s debt-to-GDP ratio remains high at over 76%, leading to concerns about the sustainability of its debt burden.
The discussions between Ghana and China are expected to focus on the terms of the debt restructuring and the repayment schedule.
The talks are expected to be constructive, as both sides have a shared interest in finding a sustainable solution to Ghana’s debt problems.
The debt restructuring proposal is seen as a crucial step in Ghana’s economic recovery and growth, which has been hampered by the pandemic and falling commodity prices.
The outcome of the discussions between Ghana and China will be closely watched by investors and other African countries grappling with high levels of debt.