Ghana’s longstanding bilateral partner, the French government has revealed that it has taken a more cautious approach in the advancement of loans to the country. This new approach, the French government says is due to the country’s rising debt levels which has increased its risk profile.
The new direction taken by France is manifested in its 2023-2024 France-Ghana Economic Report. The report reveals a very significant reduction in sovereign commitment from France to Ghana. From a record high of 239 million committed to Ghana in 2011, the amounts have subsequently declined reaching EUR 56 million as of 2023.
Head of the Economic Department at the French Embassy in Ghana, Jean-Noël Blanc said although France has become very meticulous in the advancement of loans to Ghana, there are still some sovereign concessional loans that they are committed to honouring. He however gave the assurance that France is not totally withdrawing its support to Ghana.
“Currently, we are working with the Ghanaian government on three sovereign concessional loans. In two areas, in particular, healthcare and maritime security. I would say that France’s support to Ghana is a continuing task. We didn’t stop anything,” he indicated.
“We are very cautious in the way we are lending some money to Ghana because of the debt. But at the end of the day, there are still three sovereign loans with the Government of Ghana,” Jean-Noël Blanc said.
This new conservative stance by France due to the relatively unsustainable debt levels comes as no surprise as the country’s debt-burden forced it to enter an IMF Programme leading to the Debt Restructuring Programme.
Even with the suspended debt servicing payment due to the debt restructuring, Ghana’s total public debt stock as of September 2024 stood at 75.7%. According to the Bank of Ghana’s September 2024 Summary of Economic and Financial Data, the public debt stock has been on an increasing trajectory throughout the year.
With France treading cautiously in the disbursement of loans to Ghana, the country could suffer funding gaps which can send ripple effects to the entire economy. Many budgetary lines, programme, and infrastructural projects due to the squeezed funding from France could also suffer setbacks.
Analysts believe that this is a wake-up call for the government to strengthen its fiscal discipline in order to convince the French government to support it.
