In the midst of an economic crisis, Ghana has been urged by more than a dozen relief and advocacy organizations to have its international debts forgiven in full. Fuel, electricity, and food price increases led to a record annual rate of inflation for Ghanaian consumers of 54% in December. The country’s foreign reserves are now inadequate to support imports for more than two months. All of the organizations have offices in Ghana, and they all declared in an open statement on Wednesday that the people of Ghana had suffered greatly from the crisis. Rich private lenders should write off their debt and assist alleviate a crisis they stoked.
After announcing at the end of last year that it would default on most of its foreign debt, the government sought to restructure its bilateral debt using the G20 common framework platform this month. This platform was formed in 2020 to assist coordinate debt profiling and restructuring. On Wednesday, Ghana is set to pay $41 million in interest on a $1 billion Eurobond. In December, the Ministry of Finance announced that interest payments now account for between 70 and 100 percent of government revenue. According to the assistance organizations’ letter, “Ghana’s lenders, particularly private lenders, loaned at high interest rates due to the perceived risk of financing to Ghana.” “Given that they loaned wanting large profits, it is only appropriate that following these economic shocks, private lenders gladly absorb losses,” the paper stated. Organizations such as Oxfam, Christian Aid, Caritas Ghana, Debt Justice, and Action Aid all signed a letter saying that convincing private lenders to agree to a major debt cancellation was the biggest obstacle. Specifically, they suggested that the G20 “make plain that Ghana would be politically and financially backed to remain in default on any creditor which does not accept the essential debt restructure.”
At the beginning of December, Ghana unveiled a local debt swap proposal, days before securing a staff-level agreement with the IMF for a $3bn rescue package. The International Monetary Fund (IMF) board must accept the agreement before it can be finalized. As officials work tirelessly to encourage bondholders to join in the scheme, the deadline to register for what has been nicknamed the domestic debt swap has been extended three times.
