Cancel Ghana's debts rather - CSOs to IMF

Some Civil society Organizations (CSOs) have called for Ghana’s debt to be cancelled rather than an International Monetary Fund (IMF) bailout.

In a statement on Wednesday July 13, 2022, the CSOs said any IMF loan must include debt cancellation to make Ghana’s debt sustainable.

Last week Ghana entered negotiations with the IMF for bailout of its economic crisis.

The rising value of the dollar against the Cedi is increasing debt repayments. Unless a debt restructuring takes place, any IMF loan will be used to pay high interest rates to private lenders.

“Past IMF loans have helped pay high interest debt to private lenders, while not ending Ghana’s debt crisis. This time it is the people of Ghana who must be bailed out, not the profits of rich lenders. That means cancelling debt alongside protecting and expanding vital public services and social safety nets,” Public Policy Specialist at the Integrated Social Development Centre (ISODEC) in Ghana, Bernard Anaba stated.

“Speculators lent to Ghana at high interest rates and bought debts at low prices. They took this gamble to reap lucrative returns but they lost their bet and they now need to take responsibility by cancelling Ghana’s debt,” Executive Director of Debt Justice, Heidi Chow said also added.

Signatories to the statement are the Integrated Social Development Centre (ISODEC), Caritas Ghana, ActionAid Ghana, Faith in Ghana Alliance, Tax Justice Coalition Ghana and the AbibiNsroma Foundation. International supporters include Caritas Africa, Debt Justice UK, the Asian Peoples’ Movement on Debt and Development, Eurodad and the Global Call to Action Against Poverty.

“Ghana’s government external debt service has increased from around 5% of government revenue from 2007-2012 to over 40% in 2021 well over the IMF threshold for debt sustainability of 18% of government revenue. Ghana is due to pay $1 billion in external interest payments in 2022, 90% of which are to private lenders.

“Ghana’s high interest Eurobonds have been bought and sold on financial markets at well below face value since autumn 2021, reaching less than 50 cents on the dollar by June 2022,”  the group disclosed.

They continued: “This means if paid in full, bondholders will make super profits out of Ghana, both from the high interest, and from buying the debt cheaply. Ghana’s bonds are all governed by English law, which means the UK could pass legislation to enforce any debt restructuring on private lenders.

“For the IMF to lend to a country with an unsustainable debt that country must seek a debt restructuring to make it sustainable. If creditors refuse to participate in such a debt restructuring, the IMF can still lend, so long as the country defaults on recalcitrant creditors.”