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China and Ghana Agree to a Small Debt Write-Off and a Big Bauxite Deal

Visiting Chinese Vice Premier Sun Chunlan and Ghana President Nana Akufo-Addo meeting in Accra. Photo via @NAkufoAddo.

The Chinese and Ghanian governments have reached an agreement over a controversial $2 billion infrastructure-for-resources deal that conservationists worry could jeopardize the water supply for up to five million people and fragile ecosystems in the Atewa Forest Reserve. Also during her visit, Vice Premier Sun said Beijing will write off a small portion of Ghana’s debt that is owed to China.

Key Highlights of the China-Ghana Announcements

  • SINOHYDRO BAUXITE DEAL: The Chinese credit and insurance firm Sinosure approved a first tranche of $649 million to fund the Sinohydro Bauxite Barter Arrangement. Those funds, according to the Ghana News Agency, are expected to arrive in March 2020.
  • BACKGROUND: According to the agreement, Ghana will cede 5% of bauxite reserves in exchange for $2 billion of infrastructure construction that includes roads, rails and bridge networks.

  • DEBT RELIEF: China will eliminate 250 million RMB or $36 million of Ghana’s debt. Separately, Beijing will provide Accra with a 300 million RMB or $43 million grant. No specifics were provided as to how those grants are to be applied.
  • BACKGROUND: China’s small debt forgiveness no doubt makes for good headlines but will not have any meaningful impact on Ghana’s $38.9 billion of debt (as March 2019). Also, with a debt-to-GDP ratio of 58%, Ghana’s ability to service those loans are becoming a growing concern to the IMF. More than half of Ghana’s debt is owed to external loans.

Read more on the debt relief and Sinohydro deals on the Ghana News Agency website.

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