Ghana set for Sh411bn IMF bailout after debt restructuring deal
In this file photo taken on October 15, 2019, International Monetary Funds (IMF) Managing Director Kristalina Georgieva pauses while speaking about gender equality during the IMF and World Bank Fall Meetings in Washington, DC.
Ghana’s economy is looking up after the Official Creditor Committee co-chaired by China and France provided financing assurances - committing to negotiate terms for restructuring the country’s external debt.
The move on Friday means Ghana is set to become the second debt distressed economy after Chad to benefit from resolutions under the G20 led Common Framework. Other economies that have sought resolution under the framework are Zambia and Ethiopia.
Ghana suspended payments on foreign debt including eurobonds, commercial term loans, and most of its bilateral debt on December 19, 2022, pushing the economy into default status and necessitating the restructuring of debt.
The sealing of an external debt restructuring deal with the Official Creditor Committee paves the way for a $3 billion (about KSh411 billion) bailout from the International Monetary Fund (IMF).
Ghana’s stock of public debt is reported to be $58.64 billion, $28.34 billion (48.34%) of which is external debt. The country’s debt-to-GDP ratio stands at 80.1 per cent.
During her visit to Nairobi last week, IMF’s Managing Director, Kristalina Georgieva, told Nation.Africa that there was a need to accelerate the pace at which debt distressed economies secure relief from the Common Framework
“We have a Common Framework that currently has only benefited Chad. It is about to benefit Ghana and Zambia and not too far in the future it will benefit Ethiopia. There has to be predictability from the moment a country asks for debt treatment. We need to create incentive for creditors to act faster by providing debtor countries with debt service suspension from the moment they seek debt treatment," Ms Georgieva said.
The external restructuring deal between Ghana and the Official Creditor Committee is expected to be made public through a Memorandum of Understanding that is yet to be issued.
On February 14t,Ghana’s Ministry of Finance announced conclusion of the country’s domestic debt restructuring exercise in which the government sought to restructure $15.2 billion worth of debt.
The Ministry of Finance reported that 85 per cent of eligible domestic bond holders participated in the restructuring.
