Revamp G20 Common Framework to ensure timely transparent debt restructuring – Governor, BoG

The Governor of the Bank of Ghana (BoG), Dr Ernest Addi­son, has under­scored the need to revamp the G20 Common Framework to ensure timely, orderly, equitable, inclusive, and transparent debt restructuring for distressed members, such as Ghana.

“In this regard, we call for a carefully designed debt resolu­tion mechanism, especially for vulnerable members with large domestic creditors (as in the case of Ghana) to help avert domes­tic financial market instability,” he stated at the on-going World Bank/ International Monetary Fund meeting underway in Mar­rakech, Morocco.

Speaking on the topic “Mak­ing Public Debt Useful for Sus­tainable Growth in Africa”, Dr Addison, who spoke on behalf of his fellow Governors, called for multilateral debt cancellation for vulnerable countries facing acute debt challenges.

Dr Addison said African econ­omies were faced with acute debt challenges underscored by rising social and infrastructural needs, amid spillovers from issues of the COVID-19 and the tightening of global financing conditions, saying Public debt in Sub-Saharan Africa (SSA) had now reached levels last seen in the early 2000s.

“The resultant increased debt service burden, together with complex creditor composition, has heightened risks to debt sus­tainability to the extent that more than half of the SSA members are now in or at high risk of debt dis­tress. Simultaneously, protracted high inflation has constricted the policy space, posing difficult pol­icy trade-offs for many members in the region,” Dr Addison stated.

He said the challenging envi­ronment had led to another year of moderated pace of economic recovery in SSA, stressing that SSA growth was projected to further decelerate in 2023.

The World Bank noted that SSA growth was projected to slow to 2.5 percent in 2023 from

 3.6 percent in 2022, due to rising conflict and violence across the region.

Dr Addison said SSA coun­tries remained committed to implementing relevant policies and reforms towards enhancing fiscal discipline with the aim of restoring debt sustainability and fostering inclusive and sustainable growth in the continent.”

Given the fragmented global financial architecture, the Gover­nor said the IMF should be stead­fast and adapt its lending toolkits to changing global conditions to serve its vulnerable membership better.

“In this context, we restate our earlier request for increased concessional financing by aligning Poverty Reduction and Growth Trust (PRGT) access thresholds with those of the General Re­source Account to ensure unifor­mity of treatment,” he stated.

He called on the Fund to relax the PRGT eligibility criteria to fos­ter access to adequate Fund sup­port while reducing, suspending, or eliminating entirely surcharges for most vulnerable PRGT-eli­gible members facing acute debt challenges.

Dr Addison appealed for additional pledges from willing donors to close the gaps in PRGT resources, and said strength­ening multilateral coordination and efficiency of the regulatory framework for debt resolution in low-income countries, through a formidable Global Sovereign Debt Roundtable (GSDR), was paramount.