The German government declares that it is willing to assist Ghana in advancing its proposal to its external creditors, particularly China, subject to certain conditions.
Following President Akufo-Addo’s request to Christian Lindner, the German Finance Minister, to “encourage” China to accept Ghana’s proposal for debt relief with China, the country’s largest external creditor, the reaction came.
The Asian nation claims approximately 1.7 billion of Ghana’s 5.7 billion US dollars worth of external debt, which Ghana wants to restructure.
In an unaired interview with Blessed Sogah, the host of Foreign Affairs on the Joy News Channel, German Ambassador to Ghana Daniel Krull stated that his nation is only willing to assist if certain requirements are met.
“First and foremost, we insist that the measures that can be taken in this nation must be taken. The second requirement is that we are prepared to shoulder our fair share of responsibility as Ghana’s primary bilateral donor.
However, only if all of the others participate in this endeavor. Additionally, a multilateral framework was created specifically for crises of this kind, and we urge and attempt to persuade all participants in this process to adhere to this agreed-upon framework. He stated, “It is the G 20 framework.”
Daniel Krull responded, “Let me point to three elements,” when asked to lay out the terms of Ghana’s domestic requirements. The energy industry is Ghana’s biggest loser.
Each year, this industry alone accumulates 1.5 billion in new debt. Even if you ask the IMF for $10 billion to fix that, you won’t solve the problem in the medium term.
Therefore, Ghana must find a solution to the 50 percent technical and non-technical energy sector losses. I don’t see how we can find a long-term solution to the country’s financial woes unless that is addressed.
He continued, “The revenues are the second part, which is on the opposite side of the budget.” Ghana has the lowest tax-to-GDP ratio of any country, at just 13%. As a result, we have been collaborating with the local authorities and developing a highly effective method for collecting property taxes.
“So I think that is an important path forward, and this needs to be done, as well as faster processes and decision-making, in order to meet the goals and the IMF-agreed-upon targets.”
The Ambassador added, “still amazed on the procedures for how the budget is set up and how difficult it is to get an understanding of how this all works,” in his remarks.
Additionally, I believe that is something that must be approved as an improvement. However, he is certain that new opportunities to boost economic growth will be created with the necessary political will.