HIPC Bonus For Ghana

The British Minister of State at the Foreign and Commonwealth Office, Brian Wilson, has become the first senior Western political figure to positively state that Ghana will enjoy a debt rescheduling to the tune of US$60 million by June 2001 if the government takes a firm decision to declare Ghana a Heavily Indebted Poor Country (HIPC).

President J.A. Kufuor has already directed the Ministry of Finance, to take the necessary steps to ensure that Ghana gets the full benefits under the HIPC initiative.

Mr. Wilson, who took over from the well known Peter Hain, and whose first time visit to Ghana coincided with the HIPC debate told newsmen last Monday that the British government would increase her annual assistance to Ghana. At Pounds55 million last year, it is the highest bilateral development assistance to any country in subSaharan Africa.

This, and other reliefs will enable the government get a balanced budget for the first time in several years and carry on with the task of national development.

The Minister of Finance, Yaw Osafo Maafo stated in this year's budget that debt servicing has been the bane of economic development over the years. According to the budget statement he presented to Parliament, the servicing of the country's external debts took as much as nine percent of the gross domestic product last year. In addition, 5.3 percent of the country's domestic resources were spent on domestic interest payment. And this year, about 104% of the country's revenues are expected to be used in debt servicing. In all, the government needs a total of C6, 516 billion to service domestic and external debts. That leaves the government with virtually nothing to implement its development plans, and hence the need to apply for debt relief.

But the issue of Ghana joining the HIPC has generated mixed reactions, with many Ghanaians

questioning the real motives behind the Western countries and donors pushing a government that has just taken office to rush and join HIPC. The British Minister feels the HIPC objective is not intended to create new difficulties and that's probably why the British have been most robust in their belief in HIPC as a panacea. "It is to create new opportunities," he explained in answer to questions from reporters. "There is nothing in this which is intended to impose new obstacles for Ghana. On the contrary it is meant to give Ghana an opportunity to go forward without the terrible burden of debt repayment which could cripple the budget again."

Asked to comment on the sincerity of the British government and other donors and whether they would not abandon the country midstream, Wilson said, "I have spoken to the President and to the Ministers and there has not been the slightest question of them having been forced into or pressurised into accepting HIPC."

Exhibiting much solidarity with the government, he declared, "They have looked at the figures, and they know that the only way to go forward, and at least the best way to balance the budget and to give Ghana a real chance of economic progress is to go for HIPC. That is the decision they have taken and for which I think they deserve the respect and understanding, not only of the International Community, but also of the Ghanaian people. The decision is entirely one that is best for Ghana and your government has reached that decision in good faith, and I think they should be credited for that."

Most encouragingly, the Minister said that it is a responsibility on the part of Britain and donors to make sure that there are tangible benefits to the people of Ghana.

The tangible benefits to Ghanaians, including members of government, are to be found in improved standards of living. If US$60 million can go someway in assuring that, then the people of Ghana will collectively sigh and declare that the end does indeed justify the means!