Ghana not asking for HIPC debt reduction -IMF

ACCRA, Nov 22 (Reuters) - The government of Ghana will not be seeking a debt reduction under the Heavily Indebted Poor Countries (HIPC) initiative, the resident representative of the IMF in Ghana said on Monday.

``The Ghanaian government has decided not to join the debt initiative,'' Girma Begashaw told Reuters.

Senior officials at the finance ministry denied that the government had taken a position.

However, diplomatic sources said the government might not want to announce a decision before a meeting with donors due to begin in Accra on Tuesday.

The HIPC initiative is designed by the International Monetary Fund and World Bank to cut a country's external debt burden to what they deem to be sustainable levels, conditional upon completion of a structural adjustment programme.

Diplomatic sources, requesting anonymity, said Japan, Ghana's biggest bilateral donor, had put pressure on the government not to use the initiative by not disbursing loans and by threatening not to make new commitments.

They believe Japan is arguing it cannot afford both new loans and the cost of writing off debt under HIPC.

The biennial donors' meeting reviews a government's economic performance and usually produces aid pledges from donors, coordinated by the World Bank, for the two years ahead.

Ghana has been hit by low international prices for its main exports, cocoa and gold. The government funding gap for 2000 is put by the IMF at $183 million.

On November 19, the IMF approved a disbursement of $30 million after a review of Ghana's progress under its three-year structural adjustment programme which runs until May 2002.