Seek A Lengthy Debt Repayment Plan With China - US Finance Professor To Ghana

(Williams Peprah)

Williams Peprah, an Associate Finance Professor at Andrews University in Michigan, U.S.A, has provided counsel to the Ghanaian government, advocating for negotiations aimed at securing a protracted repayment plan for its external debt owed to China. Peprah emphasized that China, driven by its geopolitical interests, is unlikely to entertain debt interest reduction, highlighting the country's dependence on interest payments as a significant source of income.

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Addressing potential strategies to navigate the complexities of debt renegotiation, Prof. Peprah cautioned that Ghana could encounter substantial delays if it does not pursue an extended repayment structure, underscoring the challenges associated with obtaining debt restructuring concessions from China. Drawing from the experiences of Zambia and Sri Lanka, he highlighted how these nations faced immense economic pressure, emphasizing China's limited propensity to grant significant interest rate reductions or principal repayment adjustments.

Prof. Peprah expounded on the challenges inherent in expecting substantial interest rate reductions from China, citing the minimal concessions extended to other countries in similar debt renegotiation scenarios. He recommended a prolonged repayment period as a potential solution, aligning with China's reliance on interest income and its classification as a developing nation with limited resources to dispense significant debt relief.

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The finance professor stressed the importance of Ghana's government delving into an informed understanding of China's historical approach to debt negotiations, asserting that such insights should significantly guide the country's restructuring proposals. He cautioned that a prolonged restructuring process could lead to severe Balance of Payment challenges, potentially impeding the disbursement of the anticipated $600 million second tranche of IMF funding.

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