The German finance minister has denounced China for not taking enough action regarding Ghana’s debt rehabilitation program as a bilateral creditor. He demands a creditor committee be formed among countries who have taken advantage of Ghana’s economic depravity in order to force their hand with debt. China is notorious for these debt practices across the world, but have caused particular issues in West African countries like Ghana. This is also not the first time the German minister has called our China’s practices on an international level. Ghana is currently $39 billion in debt (to the IMF) and needs significant debt restructuring efforts to pay this back— which a newly requested loan of $3 billion is dependent on. COVID 19 established a common framework for debt restructuring with the intent of incorporating China into the debt elimination efforts. Ghana is requesting bilateral support in adopting such a framework.
Ghana has been in debt since the era of colonialism drew to a close and designated it a sovereign state. With no fiscal or governmental experience, Ghana (and most other African countries) struggled to support themselves without amassing debt from loans and civil war expenses. Ghana has a rich store of cocoa, gold, and oil, which makes it geopolitically significant. China likely has no intentions of helping Ghana restore their debt, as the money owed can be paid much more heavily in natural resources. Furthermore, if Ghana remains in this much debt, they will continue to have no means of capitalizing on their substantial geopolitical potential, and instead remain a pawn of larger powers like China.
When discussing China’s string of pearl strategy in class, we learned that China had been using similar debt collecting techniques in the Indo-Pacific islands surrounding India as well. China uses the monetary blackmail to instill naval presence in such islands, making them a political asset in their fight to suppress India. This has made it clear that China has little intention of helping Ghana in its debt reconstruction efforts, as the debt benefits China both politically and economically.