Ghana is accelerating efforts to restructure its ballooning external debt, a crucial step in the nation’s economic recovery program. Finance Minister Mohammed Amin Adam announced this development at a press conference on March 26, 2024.
Progress Made on Multiple Fronts
Ghana’s economic woes culminated in a national debt exceeding $30 billion. However, recent months have seen progress on multiple fronts. In January 2024, the government reached an agreement in principle to restructure $5.4 billion owed to official creditors. Now, negotiations are underway to address the over $13 billion in international bonds.
The government has already begun formal discussions with at least one bondholder group. Finance Minister Adam revealed that counter-proposals on debt treatment scenarios have been received from two separate bondholder groups. These proposals will be evaluated in the coming weeks, with plans for “extensive discussions” with bondholder representatives to move the restructuring process forward.
“Government has received counter-proposals on the debt treatment scenarios from the two bondholder groups,” he said.
“In the coming weeks, government and our advisors will start extensive discussions with bondholder representatives to advance restructuring engagements.”
Resolving Arrears with Independent Power Producers
Another positive development involves independent power producers (IPPs). These companies play a vital role in Ghana’s energy sector, but disagreements over $1.58 billion in arrears had created friction. Fortunately, the government has successfully concluded negotiations with the IPPs and is on track to sign an agreement within the next few weeks. This agreement is expected to spread the outstanding debt over a period of several years, alleviating pressure on Ghana’s finances.
The International Monetary Fund (IMF) is a key player in Ghana’s economic recovery efforts. The country is currently benefiting from a $3 billion IMF program, and a second review by the IMF is scheduled for early April 2024.
Challenges Remain, but Hope Emerges
Ghana’s economic situation remains complex. Soaring debt levels, coupled with high inflation, continue to pose challenges. However, the recent progress on debt restructuring and the upcoming IMF review offer reasons for optimism. By implementing a comprehensive economic reform plan and fostering continued collaboration with international partners, Ghana can navigate its current difficulties and emerge on a path toward sustainable growth
Source: ReutersÂ
