COVID-19: Finance Minister advocates for relief of debt from China

COVID-19: Finance Minister advocates for relief of debt from China

Ken Ofori-Atta - Finance Minister

 

The Finance Minister, Ken Ofori-Atta, has admonished China to help lessen the debt burden of African countries who are expected to struggle with the economic impact of the coronavirus pandemic.

Already, he has shown that the cumulative effect of the novel coronavirus pandemic is expected to cost Ghana GHS9.505 billion.

Speaking to a US-based think-tank, the Center for Global Development, on some of the debt challenges of African countries, Mr Ofori-Atta, said he felt “China has to come on stronger” on debt relief during “this apocalyptic moment”.

“I think our African debt to China is $145 billion or so. About $8 billion of payments is required this year [2020] and about $3 billion being interests so that needs to be looked at,” he noted.

Mr Ofori-Atta said African countries were seeking means of increasing their special drawing rights (SDR), which are supplementary foreign exchange reserve assets managed by the International Monetary Fund (IMF).

“We need to find a way to enable us not to default on our commercial debt. That should not happen. So we should find a way to increase SDRs or for the Europeans to offer their SDRs as a way out.”

Ghana’s Ken Ofori-Atta is among other African Finance Ministers who have called for a $100 billion stimulus package, including a suspension of debt service payments, to help Africa combat COVID-19.

Of this $100 billion, they are expecting to have $44 billion come in the form of debt relief.

The African finance ministers held a virtual conference in March to discuss how to deal with the social and economic impacts of the coronavirus on their nations.

Even now, Sub-Saharan Africa’s debt has shot up to nearly 60 per cent of the GDP over the past decade.

Possible relief

Ghana is among the International Development Association (IDA) countries that could benefit from temporary debt relief during the pandemic.

The World Bank Group and International Monetary Fund called on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.

Ghana has also turned to the International Monetary Fund for financial support to combat the novel coronavirus pandemic in the form of a rapid credit facility.

Figures from the central bank indicate that Ghana’s public debt reached GHS 214.9 billion as of November 2019.