Ghana’s Creditor Statement Provides Financing Assurances -IMF

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has welcomed a statement from the Official Creditor Committee for Ghana on the importance of an IMF-supported economic program, together with its commitment to negotiate debt restructuring terms accordingly.

Ghana’s official creditors have formed a committee co-chaired by China and France to launch debt restructurings talks, the Paris Club said on Friday, paving the way for a sign-off on a $3 billion International Monetary Fund loan for the country.

As a result of the financial crisis, Ghana defaulted on most of its external debt in December and completed a domestic debt exchange in February.

IMF Managing Director Kristalina Georgieva said the statement by official creditors provided “the necessary financing assurances for the IMF Executive Board to consider the proposed Fund-supported program and unlock much-needed financing from Ghana’s development partners”.

Ghana secured a staff-level agreement with the IMF for the $3 billion support package in December. But for the money to be disbursed, the IMF executive board must formally approve it – a step that required prior financing assurances from official creditors.

“Creditor committee members are committed to negotiating with the Republic of Ghana terms of a restructuring of their claims to be finalised in a Memorandum of Understanding,” the statement posted by the Paris Club of creditor nations on its website.

Ghana’s finance ministry said on Twitter the government was ready to go to the IMF board. Ghana is negotiating its international debt rework under the Group of 20’s Common Framework platform.

Its $5.4 billion debt book to official creditors has been earmarked for restructuring, according to government data. The nation is also in talks to rework $14.6 billion of debt to private overseas creditors.

The country faces a debt overhaul after its already strained finances buckled under the economic fallout from COVID-19 and Russia’s invasion of Ukraine.

Reacting to the creditor committee for Ghana under the G20 common framework for debt treatment, the IMF chief said, “I welcome the statement from the Official Creditor Committee for Ghana on the importance of an IMF-supported economic program, together with its commitment to negotiate debt restructuring terms accordingly.

“This statement provides the necessary financing assurances for the IMF Executive Board to consider the proposed Fund-supported program and unlock much-needed financing from Ghana’s development partners.

“I also strongly endorse the call by the Official Creditor Committee for private creditors and other official bilateral creditors to commit to comparable debt treatments.

“The Creditor Committee’s action recognizes the Ghanaian authorities’ strong reform program, which aims to restore macroeconomic stability and debt sustainability while laying the foundation for an inclusive recovery.

“It also signals that further progress is being made under the G20 Common Framework, demonstrating that international partners are ready to work together to help countries resolve their debt issues. This is vital to enable countries such as Ghana to achieve sustainable growth and poverty reduction.”

On December 12, 2022, the IMF reached a staff-level agreement with the Ghanaian authorities on a new arrangement under the Extended Credit Facility. Board consideration of Ghana’s program request has been pending financing assurances from Ghana’s official bilateral creditors.