Enhance G20 Common Framework to fast-track debt negotiations and cancellation – BOG Governor

Bank of Ghana Governor Dr Ernest Addison is making a strong case for the G20 Common Framework to be enhanced to fast-track discussions on debt negotiations and cancellation for least developing countries.

The Bank of Ghana Governor maintained that this will “promote rapid, transparent, and equitable resolution of debt as well as facilitate debt cancellation for the most vulnerable members.”

He also argued that there is a need to leverage the Global Sovereign Debt Roundtable to support this cause.

The Bank of Ghana Governor was speaking at the 2024 Africa Consultative Group meeting with the Managing Director of the IMF, Kristalina Georgieva on the sidelines of the Annual IMF/Spring Meetings in Washington DC USA.

The Governor was speaking on the Theme: Bolstering Africa’s financing through the Overlapping crises and beyond.”

The Bank of Ghana Governor also stressed the need for reviewing the Fund’s internal debt policies, adding that “ this must ensure that the changes are impactful and achieve their intended purpose”

The G20 Common Framework and Ghana

Ghana is one of the countries that has benefited from the G20 Common Framework, put together by the G20 countries, The Paris Club, the World Bank and IMF to coordinate and cooperate on debt treatments for up to 73 low-income countries.

Debt treatments under the Common Framework are initiated at the request of a debtor country on a case-by-case basis. The framework is designed to ensure the broad participation of creditors with fair burden sharing.

Importantly, it includes not only members of the Paris Club but also G20 official bilateral creditors such as China, India, Turkey or Saudi Arabia that are not members of the Paris Club.

Ghana also applied for the Debt Suspension initiative that allows the government of Ghana some relief, when it comes to debt owed to the bilateral creditors.

The Debt Suspension Initiative is expected to end this year. This should mean that Ghana by that time should have completed negotiations with the external creditors and start meeting its debt obligations.
Reviewing IMF and World Bank support for low-income countries

The Governor of the Bank of Ghana also pushed for what he describes as a meaningful collaboration between the World Bank and the IMF “ to better align their support to low-income countries”

“We stress the need for coordination of the IMF’s LIC Facilities Review with the World Bank’s IDA21 replenishment efforts to support LICs in a holistic manner” the Governor added

Dr Ernest Addison also maintained that given the recent multiple shocks, “ there is the need for all financing options on the table including the use of the FUND’s internal resources.”

Supporting Vulnerable members like Ghana

The Governor also charged the Managing Director of the IMF and other member countries to work together to better assist vulnerable members.

“Considering the expiry of the Food Shock Window amidst a food crisis triggered by the El Nino phenomenon, the Fund’s emergency financing alongside augmentations in programme countries would be important to close climate-induced financing gaps” he added.

Bank of Ghana Governor Dr Ernest Addison also noted “In this regard, we call for intensified fundraising efforts under the second phase of the resource mobilization initiatives.”