Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has revealed that the Fund is in talks with several international creditors about perhaps cancelling Ghana’s obligations.
According to her, the action is aimed at debt forgiveness for countries facing financial difficulties.
The IMF is pushing for debt relief for Ghana and other debt-ridden countries.
She named Chad, Ethiopia, Zambia, Ghana, Lebanon, and Sri Lanka among the countries.
“It is very important for their people that we find the resolution to the debt problem, but the risk of contagion is not as high,” she said on American news channel CBS.
Ms. Georgieva noted that the current global situation makes it harder for debt-ridden countries to meet their obligations due to international liquidity constraints.
“Let us recall that 25% of emerging markets are critically stressed terrain,” she cautioned, adding that global economic heavyweights are also struggling as a result of COVID-19 and Russia’s invasion of Ukraine.
She went on to say that the IMF is working with both traditional and non-traditional creditors to find some room for impoverished countries in debt crisis to get some relief.
“In the IMF, we are working very hard to press for that resolution for these countries. We have engaged the traditional creditors, and the non-traditional creditors, like China, India, and Saudi Arabia. We have to act now”, she stressed.
She stated that 2023 will be a difficult year for China, a big non-traditional creditor.
This, she claims, will have a negative impact on developing countries with high debt levels since China will be unable to give cheaper funds.
Ghana has begun debt restructuring.
The Internal Monetary Fund (IMF) stated in November 2022 that Ghana’s government has indicated its intention to perform a debt operation (also known as debt restructuring) in 2023.
According to an update on the fund’s website, “authorities [Ghana] have assessed their public debt as being unsustainable over the medium term. Together with efforts to bring the government deficit down, they have announced their intention to conduct a debt operation to ensure debt sustainability.”
The Bretton Woods Institution has welcomed government’s decision to tread the path of debt operation.
“We welcome the authorities’ intentions to implement policies that will ensure the sustainability of public finances” the Fund stressed.
The IMF, however, indicated that the “nature of engagements and debt operations between Ghana and its creditors are sovereign decisions.”
