Germany cancels $16.4mn Ghana owes her -Osafo-Maafo

Accra, Jan. 24 GNA - Germany on Saturday cancelled 16.4 million dollars (145 billion cedis) Ghana owed her after bilateral talks at the Castle, Osu between President John Agyekum Kufuor and visiting German Chancellor Gerhard Schroeder.

An agreement to this effect was signed Mr Yaw Osafo-Maafo, Minister of Finance and Economic Planning, for Ghana while Mr Jurgen Chrobog, State Secretary in the Foreign Ministry of the Federal Republic of Germany initialled for his country.

Mr Osafo-Maafo told Journalists after the signing ceremony that the debt cancellation represented 100 per cent of Ghana's debts it owed to Germany ahead of Ghana reaching the completion point under the Highly Indebted Poor Countries (HIPC) Initiative in July.

He said normally countries that opted for the HIPC were given about 66.7 per cent of debt cancellation upon reaching the decision point and about 90 per cent when the completion point is reached " but Germany decided to give Ghana 100 per cent debt cancellation even before it reaches the completion point".

The Finance Minister said in addition Germany had decided to rehabilitate 50-kilometre stretch of the Accra-Kumasi Highway, adding, "Government is expected to give them the section to be rehabilitated and they would cost it".

He said Ghana's total external debt stood at about 6.1 billion dollars and until it reached the completion point, the actual debts to be cancelled could not be known.

Mr Osafo-Maafo said earlier in the day, six Ministers of State and 25 businessmen in Chancellor Schroeder's entourage had held a three-hour discussion on means to improve trade relations between both countries. He said the delegation complained about the high rate of inflation in Ghana that affected business, adding that if the Government attained its goal of a single digit inflation rate it would convince German businessmen and women to invest in Ghana.

Mr Osafo-Maafo said they were also worried about the repatriation of their profits and were happy that now Ghana had four months of imports cover.

He said the German private sector was interested to invest in the energy, high technology and agro-processing for exports because of the viability of tropical fruits on world market.

Mr Osafo-Maafo said Ghana's delegation to the discussion indicated the priority areas for support to include the health sector especially post-graduate medical schools, expansion of training facilities for health personnel especially to train more nurses and other para-medical staff, Village Improvement Programme (VIP) to upgrade some district capitals, sanitation and water sectors.

Others he said were the salt industry and agro-processing provided they would provide long-term funds to support the private sector.

On prospects of the visit, Mr Osafo-Maafo said the delegation was of the view that it was prudent the Government opted for the HIPC Initiative because it had enabled Germany and the United Kingdom that provided most grants other than loans to Ghana to cancel most of them. He said the delegation was optimistic that the debt relief would boost Ghana's economy tremendously if the government continued to show the same commitment in prudent fiscal and monetary policies it showed last year that sustained macro-economic stability from now up to December especially 2004 being an election year.

The Finance Minister said the delegation after their one-week tour of three other African countries, Ethiopia, Kenya and South Africa, ranked Ghana as the most investor-friendly.

He said they based their assertion on political stability, ability to transfer foreign exchange and the general business environment that was ideal for investment.