KEY POINTS
- IMF and Ghana reach staff-level deal on third loan review.
- Ghana restructures $13 billion in Eurobonds as part of debt relief.
- Economic growth in Ghana exceeds expectations, leading to an IMF forecast revision.
The International Monetary Fund (IMF) and Ghana have reached a staff-level agreement on the third review of the country’s $3 billion loan program.
The West African nation, known for its cocoa and gold production, is nearing the end of a debt-restructuring process under the G20’s Common Framework initiative after defaulting on most of its $30 billion international debt in 2022.
Progress in debt restructuring
The IMF acknowledged Ghana’s significant progress in restructuring its public debt. The country recently reached an agreement with more than 90 percent of its bondholders, leading to the restructuring of $13 billion worth of Eurobonds.
The IMF described the program’s performance as “generally satisfactory,” and Ghana remains committed to negotiating with other external commercial creditors to complete the restructuring process.
The debt-restructuring program aims to reduce Ghana’s debt by $4.7 billion and bring $4.4 billion in cash flow relief during the IMF loan period. This leaves Ethiopia as the only remaining African nation under the Common Framework still working through its debt restructuring process.
Ghana’s authorities hope the staff-level agreement will soon be approved by the IMF executive board, which would grant them access to an additional $360 million in financing. According to Reuters, the IMF’s board had initially approved the loan in May last year, which will continue until its expiry in 2026.
Economic growth and challenges ahead
Ghana’s economy has shown positive signs, growing at the fastest pace in five years during the second quarter of 2024. The IMF stated that economic growth in the first half of the year surpassed expectations, leading to an upcoming revision of Ghana’s growth forecast.
In June, the government reported that its restructuring program was progressing well, with key agreements reached to help stabilize the economy. As inflation showed signs of easing, policymakers began lowering interest rates to support economic growth.
Ghana’s ongoing economic recovery efforts are not without their challenges. The IMF’s Mission Chief for Ghana, Stephane Roudet, acknowledged that while progress has been made, the situation requires continued commitment from both domestic and international stakeholders to sustain the positive trend.
Future steps in debt relief
As part of the debt restructuring, the Ghanaian government has taken steps to negotiate in good faith with all its creditors. The IMF has also emphasized the importance of international collaboration in the process.
The Official Creditors group, represented by the Paris Club, praised the progress made by Ghana, indicating that the Common Framework process is starting to show more positive results.
The IMF anticipates that, with further progress in debt restructuring and economic reforms, Ghana will be in a stronger position to secure lasting financial stability and growth. The collaboration between Ghana and the IMF will continue to be crucial in navigating the economic challenges facing the country as it strives for recovery and stability.
