‘Eurobond holders are very unlikely to lend to African countries in future’ – Former AfDB chairman

A former Director of the African Development Bank, Gabriel Negatu, has opined that African countries in debt distress, including Ghana, may find it difficult to re-enter the international capital market even after getting out of the crisis.

According to him, the International Monetary Fund should ensure that these countries receive favourable terms from external creditors.

“The countries are in difficult situations. They need to borrow but the Eurobond [holders] particularly in the future are very unlikely to lend to African countries…should they be able to turn around and say we will treat you equitably with everyone else and the other side, no.

“The bilateral lenders operate under different modules so this is a negotiation that has to take place because on one hand you have the G20 and on the other hand you have the commercial lenders. African countries are caught between these two and I would imagine this should lead the Fund to get between these two and say, how do we manage this, who gets paid because this equitable treatment requires every lender to be treated the same way?” he asked as quoted by myjoyonline.com.

Meanwhile, the Minister of Finance, Ken Ofori-Atta, Ghana has received a draft term sheet on debt relief from its official creditors that is sufficient for the International Monetary Fund to disburse the second tranche of $600 million.

The term sheet from the Paris Club Group of creditors and new ones including China comes after months of negotiations to restructure as much as $5.4 billion of bilateral debt. The IMF board is expected to meet in a week.

“We are reviewing the draft term sheet. We need to scrutinize every clause but in terms of the broad framework, all parties are in agreement so it’s kind of a clearance to the fund. I’m hoping by tomorrow we would have finished so that whatever needs to be done will be sent to the fund,” Ofori-Atta told Bloomberg.

SSD/OGB

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