Adnan Adams Mohammed
Ghana is most likely to miss the deadline for the approval of the US$3 billion Extended Credit Facility from the International Monetary Fund (IMF), an economist has said.
The country has already reached a staff agreement with the IMF team in last quarter last year for a US$3 billion Balance of Payment support within a three year period.
The managers of the Ghanaian economy were expected to reduce the country’s debt burden and other condition in order to get the Fund’s approval. This ushered in the debt restructuring which started with the Domestic Debt Exchange Program which has been successful concluded.
However, the country needs to complete an external debt relief program to be able to bring the debt level of the country to about 60 percent of Gross Domestic Product (GDP) which has become a nightmare. Although, President Akufo-Addo had set a March deadline for the completion of the debt relief negotiations and executive board approval, economist beliefs it is impossible.
“In fact, according to the data information and assessment we’re privy to, I think it’s probably –we’re talking May thereabout in the best case scenario, and I’m actually on record on having said this,” Dr. Theo Acheampong, American based economist noted last week in an interview. “The earliest the country can complete the debt relief negotiations and get board approval for its debt relief programme is May.”
He explained that, Ghana‘s debt relief negotiations comprises four major players, each with their own interests, thus projecting to adequately addressing the specific interests of all four players within the remaining weeks of March is an extreme timeline which cannot be achieved.
“The reason is that it’s one thing restructuring your domestic debt which is covered under your local law, and it’s another thing with external debt restructuring. In this particular case here, there are four big players in the equation, each with different interests that we need to take into account.
“The first player is China, but we also have the Paris club- the 22 most advanced nations that gave money to Ghana in the form of bilateral loans and credit etc. then you go the World Bank and the IMF as one, so your multilaterals you can even add African Development Bank in there. But then you also have the Eurobond holders, so these are the four big players within that architecture,” he said.
He continued, “and then if you look at our external debt portflolio, 29 billion USD and if you break it down by these different or four players I’m talking about, the Chinese we owe US$1.9billion. So out of US$29 billion it’s roughly just about 7%. But the Eurobond holders we owe US$13 billion from the US$29billion so that’s about 45% or 45 pesewas of every cedi or dollar of debt that we owe to these external players.
“And the complexity really is that everyone has their interest, and trying to coordinate those interests within the timeframe that the Ghanaian government is talking about is an extremely tight one and even the evidence that we have seen in other jurisdictions recently in Zambia and in other places, even when China has agreed formally to be part of the creditor group with France in Zambia’s case, there are still issues as to how you treat certain categories of debt.
“So I think that the 31st March deadline most likely will not be met. It’s most likely going to go a couple of months down the line.”
Consequently, the Fund has indicated that, 98% of member countries, including Ghana published a statement providing the IMF Executive Board’s assessment of the member’s macroeconomic and financial situation in 2020, and 95% of members published the IMF country report.
Further indicating that, about 98% also used IMF financial resources published the reports, and 97% published additional documents, such as a country’s letter of intent and memoranda of economic and financial policies. About 93% published their technical memoranda of understanding.
In a document titled “Transparency at the IMF’, the Bretton Wood institution said its approach to transparency is to disclose information in a timely way unless there are strong, specific reasons against such disclosure.
“By being open and clear about its policies and the advice it provides to member countries, the IMF contributes to a better understanding of the organization and makes it easier to hold it accountable”.
“Transparency by IMF member countries helps their economies function better and makes them less vulnerable to crises. By being open, member countries encourage public discussion and examination of policies, enhance accountability and credibility, and contribute to efficient and orderly functioning of global financial markets”, it added.
