Political Risk Analyst and Economist, Dr. Theo Acheampong, has stated that it is time for government to concede and accept some terms proposed by China in the ongoing bilateral debt restructuring exercise with the Asian country.
Ghana is racing against time to negotiate a debt restructuring plan with China to pave way for the country to access $600 million second tranche funding from the International Monetary Fund.
China, has a track record for rejecting offers that seek to cut coupon payments on its loans. The country has in recent times rejected such offers from Zambia and Sri Lanka, sending the economies of those countries into serious challenges.
Speaking to Joy Business, Dr. Acheampong was of the view that government should have been aware of China’s position on debt restructuring to offer feasible terms for the negotiation.
“The Chinese will always negotiate hard. Ghana would have to come down a little bit on some of the things we are also asking for. If you look at some of the recent market statements, we were pushing for 30% to 40% haircut on the commercial side, and I suspect a similar thing on the bilateral creditors”.
Describing Ghana’s proposal as very difficult, Dr. Acheampong cautioned that there is the need to consider the time factor since a delay in accessing the $600 million before the end of the year could put severe pressures on the country’s foreign reserves.
“We need to conclude the deal before the year ends. The more uncertainties that we have, the more this ends up hurting the economy, especially as we get into next year [2024]. The traditional pressures that we see on the exchange rate will start”, he warned.
He stated that the announcement of expecting the $600 million is in itself a good news to the market, but unnecessary delays could roll back that gains if the deal is not concluded.
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