Aid groups urge debt cancellation to ease Ghana’s economic woes

In December, Ghana’s Ministry of Finance stated curiosity funds have risen to 70 to 100% of presidency income.

Finance Minister Ken Ofori-Atta this month prolonged Ghana's home debt trade deadline for a 3rd time till January 31 to safe a $3bn IMF bailout [File: Jose Luis Magana/AP Photo]

Greater than two dozen assist and marketing campaign teams have known as for worldwide collectors to cancel a big portion of Ghana’s money owed because it struggles to take care of an financial disaster.

Ghana’s client inflation rose to a document 54 p.c year-on-year in December, pushed by rising gas, utility and meals prices. Worldwide reserves have dwindled to lower than two months of import cowl.

“The individuals of Ghana have suffered extensively from the disaster,” the teams, which all have operations in Ghana, stated in an open letter on Wednesday. “Rich non-public lenders should share within the prices of a disaster they helped to create and cancel the debt.”

The federal government requested to restructure its bilateral debt beneath the G20 widespread framework platform  – launched in 2020 to assist coordinate debt reprofiling and restructuring – this month after saying it will default on most of its exterior debt on the finish of final 12 months.

Ghana is anticipated to overlook a $41m curiosity fee due on a $1bn eurobond on Wednesday. The Ministry of Finance stated in December that curiosity funds have risen to 70 p.c to 100% of presidency income.

“Ghana’s lenders, significantly non-public lenders, lent at high-interest charges due to the supposed danger of lending to Ghana,” the help teams’ letter stated.

“On condition that they lent looking for excessive returns, it's only proper that following these financial shocks, non-public lenders willingly settle for losses,” it argued.

Signatories of the letter – which included Oxfam, Christian Assist, Caritas Ghana, Debt Justice and ActionAid – stated the important thing problem was to get non-public lenders to conform to a major debt cancellation.

“The G20 may also help by making clear that Ghana can be politically and financially supported to stay in default on any creditor which doesn't settle for the required debt restructuring,” they stated.

Ghana launched a home debt swap plan initially of December, days earlier than clinching a staff-level settlement with the Worldwide Financial Fund (IMF) for a $3bn rescue package deal.

The IMF has stated its board will approve the deal provided that Ghana undergoes complete debt restructuring.

The deadline to register for what has been known as the home debt trade has been prolonged thrice as authorities battle to entice bondholders to take part within the programme.