While Government appointees are frantically arguing against claims by critics that the massive debt incurred by the Akufo Addo administration has driven Ghana into HIPC, Finance Minister Ken Ofori-Atta is secretly negotiating for debt relief under a glorified form of HIPC.
Last Friday, October 23, 2020, Finance Minister Ken Ofori-Atta, during a virtual plenary session of the Development Committee of the World Bank and the IMF repeated a call for debt relief in a repeat of a similar call on March 31, 2020, through an earlier virtual meeting between African Finance Ministers and the Bretton Woods institutions.
The desperate call for debt relief by Ofori-Atta is for an extension of the Debt Service Suspension Initiative (DSSI) introduced by the G20 for vulnerable countries. The DSSI is effectively a glorified HIPC initiative.
According to the European Network on Debt Development (EURODAD) on its website, www.eurodad.org, the DSSI that Mr. Ofori Atta is eagerly calling for is a pimped up version of the HIPC initiative.
EURODAD is a network of over 50 non-governmental organisations from 20 European countries.
“The G20 recently announced the agreement in principle of a “Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI)”. The framework aims to address the problem of unsustainable debts faced by many countries in the aftermath of the Covid-19 pandemic. The agreement, which includes all members of the G20 and the Paris Club, still requires domestic approval by all the participants. The adoption and details of the framework are set to be published at an extraordinary meeting of G20 Finance Ministers and Central Bank Governors ahead of the G20 Summit on 21-22 November,” EURODAD said,
“Despite these similarities, it is possible to expect important differences. First, the Common Framework will probably apply to all DSSI countries, regardless of income levels. Given the US-China differences, it is rather unlikely that the G20 will agree at this stage to provide special treatment to low-income countries on standardised terms similar to those of the Heavily Indebted Poor Countries (HIPC) initiative. In that case, the Paris Club granted, under the Cologne terms, a cancellation of up to 90 percent of non-Official Development Assistance (ODA) credits. Nothing as substantial seems to be under discussion at this stage,” the group stated.
The World Bank and IMF recently projected that Ghana’s debt to GDP ratio will cross 76% by the close of this year. This squarely puts Ghana in the status of a Highly Indebted Poor Country (HIPC) however, Ghana cannot opt for that initiative specifically, claims government officials because Ghana had already signed up to it in 2000 and had completed its programme with creditors.
However, a recent report released by the IMF on March 25, 2020, categorised Ghana among some 39 countries eligible for HIPC debt relief.
The report titled: “Debt Relief Under Heavily Indebted Poor Countries Initiative”, listed Ghana among 39 countries as part of a “List of Countries That Have Qualified for or are Eligible or Potentially Eligible, and May Wish to Receive HIPC Initiative Assistance (As of February 2020)”.
The Akufo Addo administration has been slammed for being the highest accumulator of Ghana’s public debt since its independence in 1957.
In just four years, the flamboyant government has gulped up some GHC 160 billion of the GHC 260 billion of public debt since independence. Yet, the government has been accused of having invested zero in social infrastructure throughout its four-year regime as critics question what the huge debt was spent on.