GHANA has finalized a pact with its official creditor committee to formalize a debt restructuring deal agreed in January, smoothing the path towards further funding from the International Monetary Fund (IMF), its finance ministry announced on Wednesday.
This agreement sets the stage for the IMF’s executive board to approve the second review of a $3bn loan package and release the next tranche of $360 million.
‘The IMF Board’s approval should also trigger more financial assistance from our development partners, particularly the World Bank,’ the finance ministry stated.
This announcement confirms reports from last week indicating that a memorandum of agreement was imminent. Ghana is restructuring its debt to emerge from its worst economic crisis in a generation after defaulting on much of its overseas debt in 2022 amid soaring servicing costs.
Each creditor nation is now expected to sign the agreement individually. The ministry noted that this would also bolster ongoing restructuring discussions with private creditors.
Ghana’s sovereign dollar bonds showed little change by 0837 GMT, with most issues trading between 50-51 cents on the dollar, a distressed level indicating market expectations of potential reductions in private debt, Reuters reported.
The financial terms of the agreement with official creditors remain unchanged from the deal agreed upon in January, the ministry added, providing ‘significant debt service relief’ during the IMF-supported programme.
In addition to its debt challenges, Ghana, the world’s second-largest cocoa producer, is also facing cocoa delivery delays due to poor harvests, potentially reducing income and compounding debt distress.
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