An Associate Finance Professor at Andrews University in Michigan-USA, Williams Peprah, has said the Chinese, one of Ghana’s highest creditors, is not exactly interested in debt forgiveness.
He explained that since it looks like Ghana is running out of time, the government should instead negotiate an extension of the debt payment schedule.
According to him, China relies heavily on interest payments and therefore
“Our government should rather possibly negotiate for a lengthy repayment period. The Chinese are not interested in negotiating debts down because they feel that once they do that, more countries will come forward for similar treatments,” he was quoted by myjoyonline.com.
He added: “It is not certain that the Chinese are going to give us a haircut of 20 to 40% that the finance minister is expecting. In Zambia, they gave them a 1.0% haircut on the coupon, which is the interest payment and not on the principal. For Sri Lanka, they lengthened the payment process. Based on this, it will be difficult for Ghana to get what the Minister is expecting.”
Prof. Peprah noted that the government should have studied the way of the Chinese before making their debt proposals.
He said this is because “This could be one of the ways because China gets a lot of their revenues from interest payments. They are classified as developing nations and so they are seen not to have a lot of resources to just give out.”
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Debt restructuring
