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13.06.2005 Business & Finance

Ghana To Earn $4.1bn Debt Relief


Ghana is expected to benefit from a debt relief of about $4 .1 billion, following the decision by the G-8 to grant $40 billion debt relief to 18 countries.

This constitutes about 80 per cent of the total debt of $5.2 billion Ghana owed its multilateral donors, comprising the World Bank, the International Monetary Fund (IMF) and the African Development Fund, as at the end of last year.

The Minister for Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, in an interview was quick to add that the size of the debt relief could vary because the G-8 was yet to give the cut off date for the debt cancellation.

Reacting to the decision announced by Mr Gordon Brown, the Chancellor of the Exchequer of the United Kingdom, on behalf of the G-8 Finance Ministers at the end of their meeting in London, Mr Baah-Wiredu said the decision by the G-8 would help the government to release more money for development projects in the country.

“The decision by the G-8 is in our interest and it will go a long way to reduce poverty in the country,” Mr Baah-Wiredu stated.

He, however, conceded that “it is a challenge to us and we have to meet it squarely”.

Mr Baah-Wiredu said the countries to benefit from the relief were those who benefited from the HIPC reliefs, having met the criteria to effectively fight corruption, promote good governance, as well as implement some economic policies.

He, however, stated that although the money was substantial, “it is not enough for a breakthrough, considering the huge sums of money needed to tackle our development problems”.

Mr Baah-Wiredu said against that background, there was the need for Ghana to increase its revenue mobilisation drive to support development projects.

He said this year, the government was expected to raise ¢24 trillion and called on revenue agencies to redouble their efforts to enable them to meet the set target.

The other African countries to benefit from the package are Mali, Mauritania, Senegal, Ethiopia, Uganda, Rwanda and Tanzania.

The rest are Mozambique, Zambia, Madagascar, Benin, Burkina Faso and Niger.

In a related development, a Deputy Minister for Finance and Economic Planning, Dr A. Akoto Osei, said, “It is good news to hear your creditors speak of giving you debt relief so that more resources could be freed for you to carry on with your development agenda.”

Dr Akoto Osei said Ghana had long been expecting such a gesture from the G-8, except that it was not too sure when it would come, following the reluctance of the US Government to be part of the deal.

He explained that judging from the performance of the Ghanaian economy and its credentials as a democratic country, Ghana was certain that it would be one of the beneficiaries of the debt relief.

Dr Akoto Osei said it was obvious to the government that majority of Ghanaians had recognised the wisdom in the NPP administration opting for the HIPC initiative in 2001, adding that “everybody is looking for HIPC money to undertake one project or the other, be he or she a government functionary or from the minority”.

“Why should we not be happy about the decision to give us a breather from the suffocating debt situation?” he questioned, and noted, “We are not aware of the details of the relief.”

Dr Akoto Osei expressed the hope that during the visit of President J.A. Kufuor to the US where he will meet President George Bush, the issue of debt relief would come up for discussion and President Kufuor would be told the details.

The world's richest countries, the G8, have agreed to write off the $40bn (£22bn; 33bn euros) debt owed by 18 mainly African countries.

Anti-poverty campaigners have also welcomed the deal but say they want more nations to benefit.

The UK, which holds the G8 presidency this year, also hopes to secure a large increase in development aid to the poorest countries.

Nine more countries are expected to qualify within 18 months to bring the total to $55bn. UK's contribution over the next 10 years is between $700 million and $960 million, while that of the US is between $1.3bn and $1.75bn. Meanwhile, Africa's total external debt is $300bn.

Announcing the deal, UK Chancellor Gordon Brown said now was "not a time for timidity but a time for boldness".

Under the agreement, the World Bank, the International Monetary Fund and the African Development Fund will immediately write off 100 per cent of the money owed them by 18 countries - $40bn in total.