China is worried over debt restructuring implications for other debtors

German Ambassador to Ghana Daniel Krull has observed that China’s hesitance to come to the external debt restructuring table could be due to fears over implications for its dealings with other African countries.

China’s current position as the leading creditor to African countries, the diplomat explains, means that whatever arrangement it ends up making with Ghana in terms of ongoing debt restructuring to help the country meet requirements for an International Monetary Fund (IMF) bailout must be done to all the others that are looking to reduce sovereign debts or heading to the Bretton Woods Institutions for bailouts.

“China has been very reluctant in terms of setting up a creditors committee, which is a key decision to take now; and we are aware that, so far, the Ghanaian government has not been able to enter into direct talks with them; so we are trying to talk to them, but China is a big player and has its agenda for dealing with Africa.

“We must also be aware that other countries are having similar challenges, and that is making it so complex because it might not be with only Ghana but other African countries. So, this is not only with Ghana but all of Africa; and that explains China’s hesitance in negotiating with Ghana. Let’s not also forget that China’s economy has also been hit hard by COVID-19 and is not in the best of shape,” he said.

Imperatively, he urged China to take a bold internal decision as soon as possible and come to the negotiation table in order to enable Ghana chart a pathway to recovery from the ongoing economic challenges characterised by unsustainable public debt.

Touching on what the German government is doing to help Ghana out of its woes, Mr. Krull emphasised that Germany remains committed to supporting the country in these hard times; nonetheless, every help must be given within the remit of international conditions and policies.

“The recent visit of top German ministers and parliamentarians to Ghana in recent times is a clear sign of our commitment and preparedness to support in all times, and especially in times of crisis like this one. We are prepared to live up to our responsibility as one of the major bilateral creditors to Ghana, but we are ready to do so with certain criteria adhered to,” he said.

He stated that the G20 has a common framework for handling such crises and that Germany is committed to respecting the framework irrespective of the fact it might not be perfect.

The ambassador further called on business moguls who have good relationships with China to also get involved in lobbying the Asian nation to come to the aid of Ghana.

The ambassador made these remarks in his engagement with the press at his residence to brief them on the state of bilateral relations between the two countries after the German employment minister’s visit.

China-Ghana debt restructure status

The Minister of Minister, Ken Ofori-Atta, disclosed last week that government’s planned high-level meeting with Chinese creditors over Ghana’s debt restructuring has been postponed to late March 2023.

For many stakeholders, this could affect Ghana’s timelines for an economic bailout of US$3billion to build back the economy, as the country needs to conclude its debt restructuring negotiations with its creditors to be able to secure the Fund’s executive board approval for the bailout programme.

China and its agencies hold about US$1.7billion of Ghana’s US$5.5billion bilateral debt, and the specialised nature of their lending windows means that Ghana cannot add them to the model used to negotiate with the G20 and Paris Club members.