China has signaled its unwavering support for the country’s debt sustainability efforts and sustainable development, following a meeting between the Asian country’s officials and Minister of Finance, Ken Ofori-Atta, who is on a five-day working visit to China.
In his inception meeting with Vice Minister Liao Min, Mr. Ofori-Atta conveyed on behalf of President Nana Akufo-Addo, Ghana’s deepest appreciation to the Chinese authorities for their leadership and continuous support to Ghana over the past decades.
He recalled that China’s leadership, working with the G20 Creditors, led to the provision of financing assurances by the Paris Club and other creditors on May 12th, 2023, which paved the way for the IMF Executive Board to approve Ghana’s US$ 3 billion (SDR 2.242 billion) three years Extended Credit Facility (ECF) arrangement to support the country post-COVID economic recovery programme on May 17th 2023.
He further recalled that during his last official visit to China in March 2023, the then Finance Minister, Lui Kun indicated that what Ghana was experiencing was a temporary economic misalignment and that he was confident that Ghana would be out of the woods in no time, if the right reforms and fiscal consolidations measures are implemented.
Minister Liao Min expressed optimism about Ghana’s growth prospects and indicated that China’s long-standing relationship with Ghana endeared them to take an active part in the discussions with the Official Creditors Committee (OCC) in order to deliver the needed debt relief under the IMF programme.
The Minister further indicated that China was committed to channeling more private capital into Ghana to bolster the West African country’s economic recovery in a sustainable way, leveraging the experience of the Chinese private sector and Ghana’s hosting of the headquarters of the African Continental Free Trade Area (AfCFTA).
In providing an update on Ghana’s economic recovery, Mr. Ofori-Atta indicated that the implementation of the Post Covid-19 Programme for Economic Growth (PC-PEG), which underpins Ghana’s IMF ECF programme, has begun to yield results after barely a year of operation.
Inflation which went as high as 54.1 percent in December 2022 had reversed to 23.2percent at the end of 2023 and growth had rebound with GDP averaging 3.2percent for the first three questers of 2023.
The currency, which had depreciated by some 50 percent in 2022 had stabilised in 2023, recording a marginal depreciation of 7.2 percent between February and December 2023.
Overall, he said there was a general rebound in confidence in the economy, stressing the government’s commitment to working with the private sector to spur growth and direct investment into critical growth sectors.
To further boost business confidence, he said the government’s Ghana Mutual Prosperity Partnership had engaged Chinese businesses under the partnership to get a fair sense of their challenges and what government could do to enhance the business environment.
The Chairman of the Exim Bank of China, Zheng Wencai, on his part, indicated that the OCC had to build consensus to deliver an agreement in principle on Ghana’s debt treatment which provided the basis for the IMF to proceed to Board and approve Ghana’s first review.
He was confident that the OCC will deliver the memorandum of understanding (MoU) in short order.
He advised Mr. Ofori-Atta to pursue an expedited resolution of debt treatment with the commercial creditors, including Eurobond holders, keeping the principle of comparability of treatment in view.
In his response, Mr. Ofori-Atta explained that the agreement reached by the official creditors, provides a firm basis to engage the commercial creditors. He was therefore helpful in reaching an agreement with the commercial creditors by March 2024.
The finance minister concluded his engagement by reiterating Ghana’s commitment to fully implementing the IMF ECF programme to ensure that macroeconomic stability is entrenched and guaranteeing that the path to fiscal consolidation is maintained even though 2024 is an election year.
