Consumer price inflation in Ghana reached 54.1% year-on-year in December, driven by higher fuel, utility and food prices. International reserves have shrunk to less than two months of import cover. [L8N33W295]
“The people of Ghana have suffered immensely from the crisis,” the groups, all of which have operations in Ghana, said in an open letter. “Wealthy private creditors must share the costs of a crisis they helped create and cancel the debt.”
The government asked to restructure its bilateral debt under the G20 common framework platform earlier this month, after announcing it would default on most of its external debt at the end of last year. [L1N3400FN]
Ghana is expected to miss a $41 million interest payment due on a billion dollar Eurobond on Wednesday. The finance minister said in December that interest payments have reached between 70% and 100% of government revenue.
“Ghana’s creditors, especially private lenders, have been lending at high interest rates because of the supposed risk of lending to Ghana,” the letter said.
“Given that they have been lending in search of high returns, it is only fair that in the wake of these economic shocks, private creditors voluntarily accept losses,” she adds.
Signatories to the letter, including Oxfam, Christian Aid, Caritas Ghana, Debt Justice and ActionAid, said the main challenge was to get private creditors to agree to meaningful debt cancellation.
“The G20 can help by making it clear that Ghana will be supported politically and financially to remain in default with any creditor who does not agree to the necessary debt restructuring,” they added.
Ghana launched a domestic debt swap plan in early December, days before reaching a staff-level deal with the International Monetary Fund (IMF) for a $3 billion bailout.
The IMF said its board would only approve the deal if Ghana underwent a full debt restructuring.
The registration deadline for the so-called Domestic Debt Exchange has been pushed back three times as authorities struggle to entice bondholders to join the scheme.