German Ambassador to Ghana Daniel Krull has said the Akufo-Addo government is too big and needs trimming down.
Also, he says the government of Ghana must be willing to cut down its huge budget expenditure if it is to get help from bilateral creditors.
“I only can compare with the other countries like mine and I can come to the conclusion that there is huge number; the number is much higher than in my country, so, that may bring me to the conclusion that there is room for improvement,” Mr Krull said in reference to the size of Ghana’s government.
On cost-cutting, he told Accra-based Joy News: “It depends very much on what kind of expenditure you are looking at and I am convinced this is true, if I look at the budget of the German Foreign Ministry, and the German government, I am convinced there are important parts that can be cut without hurting the economic development and I am convinced without going into details this is also true for Ghana.”
“There are certainly expenditure that can be lowered substantially and make an important impact”, he stressed, noting: “I cannot go out to the international community, say: ‘I need help’, but I am not willing to cut my own budget expenditure. I have to be careful not to cut into social expenditure that are destroying lives and families.”.
The Ambassador said Germany is ready and willing to help achieve debt relief for Ghana but insists it can only do that if the government of Ghana would put its house in order.
President Nana Addo Dankwa Akufo-Addo on Friday, 3 February 2023, urged Germany to “encourage” China, an ad hoc member of the Paris Club, to support Ghana’s debt restructuring efforts.
He said it was critical that the Paris Club swiftly establishes, with the participation of other official creditors, a creditors committee, to support the efforts that would enable Ghana to restore economic growth.
The Ghanaian leader made the call when the visiting German Finance Minister, Christian Lindner, called on him at the Jubilee House, Accra.
Linden, who led a delegation from his country, held bilateral talks with the President aimed at boosting relations and economic ties between the two nations.
President Akufo-Addo told the German minister that the main concern for his government was to conclude negotiations with the International Monetary Fund (IMF), particularly at the Board Level and seal a deal with the Bretton Woods institution by mid-March this year.
“Our main concern right now is the arrangements that we are in the process of concluding with the IMF…and the specific assistance that will be useful to us and help us fast-track the process.”
“Our target is that by the middle of March, we should be before the Board for the full agreement. We have already taken one important step forward in concluding a staff-level agreement with the IMF and we are now looking to go the full haul in concluding the agreement. We are hoping that it will be done by the middle of March.”
“One of the steps towards that has been the domestic debt exchange programme that we are on, which fortunately, we have quite a lot of difficulties, has now been virtually concluded,” he stated.
However, President Akufo-Addo stressed that there was a vital need for other creditors to support the efforts that his government was undertaking to restructure both the external and domestic debts of the country, to enable the IMF deal to fall through quickly.
“We now have our relations with the Paris club and the common framework, and we are looking for as quickly as possible a creditor committee to be established, so we will have the body with whom we can engage to bring those discussions as quickly as possible.”
“We have good relations with China. We will like you to encourage China to participate in these programmes as quickly as possible…A very important consideration for us is the financial stability fund that has been promised us as one of the key outcomes of these negotiations and definitely once again, your voice in trying to bring that into being is something that we would appreciate very much,” President Akufo-Addo told Finance Minister Lindner.
The President commended the German government for extending support to Ghana to enable her to overcome the current economic difficulties. He said the German government had proven to be a reliable ally and Ghana would continue to count on the European nation as “a privileged partner” as the country seeks a bailout from the IMF.
The IMF, last December reached a Staff-Level Agreement on a $3 billion, three years Extended Credit Facility with Ghana to relieve its debt.
Speaking on the president’s appeal to the German Finance Minister for debt relief help, as far as China is concerned, Mr Krull laid out some conditions that he said Ghana must first meet before his country could offer the requested assistance of convincing China to restructure or forgive Ghana $1.7 billion of the West African country’s total debt portfolio of $5.7 billion owed its bilateral partners.
Mr Krull said: “First of all, we insist that those measures that can be taken here in this country have to be taken.”
“The second condition is that; yes, we are willing to take our share of responsibility as one of the major bilateral donors to Ghana but only if all the others also join in this effort”, the ambassador pointed out, adding: “And there is a multilateral framework that was set up exactly for these kinds of crises and we urge and try to convince all stakeholders in this process to stick to this agreed framework. It’s the G20 framework.”
Being more specific about the pre-conditions, Mr Krull outlined: “Let me point to three elements: the biggest loss maker in Ghana is the energy sector. In this sector alone, each year, GHS1.5 billion in new debt is piled up. So, if that is not solved and you can ask the IMF for $10 billion, you still will not solve the problem in the medium term.”
“So, there has to be an answer in Ghana to the 50% technical and non-technical losses in the energy sector”, Mr Krull notes, stressing: “If that is not resolved, I don’t see how we can make finding a sustainable solution for the financial problems of the country”. “The second part”, the ambassador said, “is on the other side of the budget and that is the revenues”.
“Ghana has the lowest; one of the lowest tax-to-GDP ratios, not even 13%. So, we have been cooperating with the local authorities and setting up a very smart system of property tax collection”.
“So, I think that is an important way forward and this has to be done and processes and decision-making have to be faster to meet the goals, to be able to meet the targets that have been agreed with the IMF”.
The Ambassador also said he is “still amazed on the procedures for how the budget is set up and how difficult it is to get an understanding of how this all works”. “And, I think that is something that has to be [improved]. He is, however, confident that with the necessary political will, new opportunities will be created to enhance economic growth.”
Meanwhile, he said debt relief overtures made to China by the German government have been futile since China is refusing to play ball, a situation, he noted, that poses a “severe threat” to Ghana’s push for an IMF bailout
