Ghana’s Official Creditors Agree To Debt Restructuring, IMF Disbursement Nears
- Ghana’s official creditors, including China and France, reach an agreement to restructure debts up to December 2022, a crucial step for the country’s economic recovery
GHANA’S official creditors, including key players like China and France, have reportedly reached an agreement to restructure debts extended to the country until December 2022. This development marks a significant stride for Ghana in its ongoing efforts to navigate through economic challenges.
The deal with official creditors is seen as a crucial precursor to the approval of a $600 million disbursement under the IMF’s $3bn bailout programme. The restructuring discussions, however, faced a stumbling block regarding the ‘cut-off date’ — the date after which new loans with bilateral creditors would not be eligible for restructuring.
China and France, co-chairing the Official Creditor Committee (OCC), collectively hold around a quarter of Ghana’s $20bn external debt earmarked for restructuring. The ‘cut-off date’ became a point of contention, with some creditors preferring December 31, 2022, aligning with Ghana’s default earlier that month, while others advocated for March 24, 2020, the inception of the Group of 20’s debt service suspension initiative (DSSI) amid the Covid crisis. Ghana did not participate in the DSSI.
The Ghanaian finance ministry, as of now, has not commented on the agreement. However, Finance Minister Ken Ofori-Atta expressed optimism about the broad agreement, stating that ‘all parties are in agreement’ in terms of the framework. He added that this alignment could lead to the IMF signing off on the awaited $600 million disbursement.
While the deal foresees no reduction to principal and interest rates overall, Ghana is expected to have a four-year hiatus from payments, with regular payments resuming thereafter. The formal acceptance of the proposal by Ghana is still pending.
As Finance Minister Ofori-Atta aims to conclude the review of the draft term sheet by Friday, the outcome of these negotiations holds substantial implications for Ghana’s economic recovery and its ability to address pressing issues such as high unemployment and poverty levels.