Ghana has reached a landmark agreement with its official creditors to restructure its debts and ease its financial burden. The deal, which was announced on Wednesday, is a key step for the West African nation to advance its $3 billion bailout program with the International Monetary Fund (IMF).
A Breakthrough for Ghana
The debt restructuring deal involves bilateral lenders, including China and France, who co-chairs the Official Creditor Committee (OCC). They hold around a quarter of Ghana’s $20 billion external debt earmarked for restructuring. Ghana defaulted on its debt payments in December 2022, triggering a crisis that threatened its economic stability and social development.
Under the terms of the agreement, Ghana will not pay any principal or interest to its official creditors for the next four years, with payments set to resume thereafter.
The agreement is a significant achievement for Ghana, which has been struggling with high debt levels, low revenues, and the impact of the global pandemic. The deal will provide Ghana with much-needed fiscal space and liquidity to pursue its recovery and growth plans.
A Boost for the IMF Programme
The debt restructuring deal is also a crucial requirement for Ghana to receive the next tranche of $600 million from the IMF, which approved a $3 billion bailout program for Ghana in April 2020. The program aims to support Ghana’s economic and financial reforms, strengthen its resilience, and foster inclusive growth.
The IMF had withheld the disbursement of the funds pending the outcome of the negotiations between Ghana and its official creditors. The IMF’s Executive Board is expected to approve the release of the funds soon, following Ghana’s formal acceptance of the proposal.
On Friday, Ghana’s Finance Minister Ken Ofori-Atta expressed optimism that he would finalize the deal and that the IMF would sign off on the disbursement. However, he said that the broad framework of the deal had the consensus of all parties and that it would help Ghana restore its debt sustainability and market access.
Ghana’s democratic governance, social progress, and regional leadership have earned it praise. The debt restructuring deal is a positive sign for the country as it seeks to chart its way out of the worst economic crisis in a generation. The deal will also set a precedent for other African countries facing similar debt challenges and seeking relief from their official creditors.
The IMF expects Ghana’s economy, which boasts natural resources such as gold, cocoa, and oil, to recover in 2024 after it contracted by 1.1% in 2023. Also, the IMF projects that Ghana’s economy will grow by 4.7% in 2024, driven by the recovery of domestic demand, public investment, and exports.
Ghana’s debt restructuring deal is a testament to its resilience and determination to overcome its difficulties and achieve its potential. The deal will also enhance Ghana’s cooperation and partnership with its official creditors, who have shown their solidarity and support for Ghana’s development aspirations.
Source: ReutersÂ
