China plays hard ball on debt negotiations — IMF deal in limbo
There are growing fears that the country’s US$3 billion multi-lateral bailout may delay as China’s long-held negotiation manoeuvres come to bear on the economy, experts have warned.
With the International Monetary Fund (IMF) board set to meet in April for the yearly spring meetings, China has posted its expected meeting with Ghana to late March, a situation that has sent shivers down policymakers as they sweat under a possible protracted negotiation going all the way into April.
With China accounting for about 30 per cent of the country’s US$8.5 billion external debt, experts say it may derail the country’s quest to secure an IMF deal, a situation they believe may lead to dire consequences for the economy.
Ghana’s economy has been faced with severe challenges since last year, with its debt hitting GH¢575 billion, representing over 90 per cent of Gross Domestic Product (GDP).
The government officially approached the IMF in July 2022 for a US$3 billion bailout programme to save the sinking economy.
In December 2022, the government reached a staff-level agreement with the fund and is now left with board-level approval before it can access the US$3 billion support.
However, the board-level approval is hinged on the country’s ability to restructure its domestic and external debt.
A domestic debt exchange programme, which was announced in December, was met with stiff opposition from stakeholders. But after much deliberation, the government finally managed to reach an agreement with over 80 per cent of its domestic debtors.