The International Monetary Fund (IMF) has issued out information on how the government of Ghana has been put at risk of losing a portion of its earnings from its mineral resources and future energy sales due to the four collateralized loans from China.
Ghana has been dependent on china as consistent source of finance for its large-scale projects. Over the course of two decades Accra has amassed approximately Ksh692.5 billion.
Ghana is currently debt-trapped and enduring its most notable economic crisis caused by several years of uncontrolled borrowing. It has a current external debt portfolio that exceeds Ksh4.15 trillion.
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Most developing countries look for debt in China and it is the biggest bilateral lender in the world. It however maintains secrecy about its lending practices and how it renegotiates with its troubled clients.
Ghana has at least eight Chinese collateralized loans with some of its minerals serving as security. As of the end of 2022, Ghana owed China a total of Ksh263.15 billion, Ksh85.793 billion was in the form of secured loans.
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As of the end of 2022, China owned all of Ghana’s collateralized debt as per the four loan agreements that were signed between 2007 and 2018 and a total of Ksh85.793 billion to fund infrastructure projects. For collateral, the loans have cocoa, bauxite, oil and electricity sales.
In the event that Ghana fails to honor its financial obligations, China has the power to take Ghana’s oil, cocoa, bauxite or even electricity sales earnings to pay off the debt as per the loan agreement.
