According to Daniel Krull, the German ambassador to Ghana, the German government is ready to help Ghana get its request for an external creditor debt cancellation accepted.
This comes after it was announced that Ken Ofori Atta, the finance minister, would be heading a powerful government delegation to China to lobby for the acceptance of the proposal for China to cancel its debt.
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Ofori-Atta informed German Minister Svenja Schulze that China has agreed to bilateral talks.
Ghana is attempting to restructure a debt of $5.7 billion, with China owning a third of it, or $1.7 billion.
In an interview on Foreign Affairs on Joy News, the German ambassador to Ghana, Daniel Krull, stated that his nation will only provide assistance if specific requirements are met.
He listed three requirements that Ghana must meet.
He said “First of all, we [German] insist that those measures that can be taken here in this country have to be taken. The second condition is that, yes, we are willing to take our share of responsibility as one of the major bilateral donors to Ghana.
“But only if all the others also join in this effort. And there is a multilateral framework that was set up exactly for these kinds of crises and we urge and try to convince all stakeholders in this process to stick to this agreed framework. It’s the G20 framework.”
He “Let me point to three elements. The biggest loss maker in Ghana is the energy sector.
“In this sector alone, each year, 1.5 billion in new debt is piled up. So if that is not solved and you can ask the IMF for $10 Billion, you still will not solve the problem in the medium term.
“So there has to be an answer in Ghana to the 50% technical and non-technical losses in the energy sector. If that is not resolved, I don’t see how we can make finding a sustainable solution for the financial problems of the country.”
The second part he mentioned “is on the other side of the budget and that is the revenues. Ghana has the lowest one of the lowest tax to GDP ratios, not even 13%. So we have been cooperating with the local authorities and setting up a very smart system of property tax collection.
“So I think that is an important way forward and this has to be done and processes and decision making has to faster to meet the goals, to be able to meet the targets that have been agreed with the IMF.”
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He stated that he’s “still amazed by the procedures for how the budget is set up and how difficult it is to get an understanding of how this all works.
“And I think that is something that has to be (improved) approved. He is however confident that with the necessary political will new opportunities will be created to enhance economic growth.”
Ghana is currently restructuring its debt, both domestically and internationally, in order to qualify for IMF assistance.
