The Republic of Ghana to Imminently Sign up for the G20 Common Framework
The Republic of Ghana is reportedly poised to sign up for debt restructuring under the G20 Common Framework for Debt Treatment Beyond the Debt Service Suspension Initiative. While there has been no official information from the Government of Ghana (GoG), news broke out on 10th January 2023 that the government of Ghana will imminently sign up for the framework provided there are guarantees that the process will be more expeditious compared to experiences by Chad, Zambia and Ethiopia who are the three African countries already engage in the process of debt restructuring through the G20 Common Framework.
This news follows an announcement by GOG on Monday 19th December 2022 to suspend debt service payments under certain categories of its external debt while admitting that Ghana’s public debt has become unsustainable, and that the Government is not able to fully service them down the road if no action is taken. It comes against the backdrop of debt servicing currently absorbing more than half of total government revenues and almost 70% of tax revenues. Ghana’s public debt stock currently exceeds 100 per cent of the country’s GDP and interest payments on debts alone absorb between 70 and 100% of the government’s revenues.
Previous efforts for African countries to cope with potential debt distress have included the Debt Service Suspension Initiative (DSSI) and the issuance of IMF Special Drawing Rights (SDRs) to which Ghana respectively failed to sign up but received 1 billion USD worth of IMF SDRs. Ghana’s case is clear proof of the inadequacy of current measures put in place by development partners to help Ghana and other African countries cope with their growing debt burden.