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The International Monetary Fund said it was “optimistic” that Ghana and its official bilateral creditors would reach a debt restructuring deal soon, paving the way for another $600 million IMF loan payment to the country.
Discussions between Ghanaian authorities and the Official Creditor Committee, co-chaired by China and France, are showing “promising progress”, the IMF’s Resident Representative for Ghana said.
“We are optimistic that an agreement will be reached soon, allowing to swiftly present the first ECF (Extended Credit Facility) programme review to our Executive Board,” he said.
The West African nation defaulted on most of its external debt in December 2022 and needs to secure restructuring deals with official creditors, international bondholders and other commercial lenders, to successfully implement the IMF loan deal and emerge from its worst economic crisis in a generation.
Ghana’s sovereign international dollar bonds rose on Tuesday, after a report that its government expected to receive soon a draft term sheet from its official creditors to restructure $4.5 billion of debt.
Ghana has faced challenges accessing international capital markets due to the escalating costs associated with domestic debt.
The country is aiming to restructure $20 billion out of total external debt which stood at $30 billion by the end of 2022, as outlined in a government presentation to investors.
Ghana aims to cut around $10.5 billion from external debt interest payments over the next three years to successfully implement the $3 billion loan deal from the IMF.
To achieve this, Ghana is in the process of restructuring its external debts through the Common Framework, a debt restructuring mechanism established by the Group of 20 (G20) leading economies. This framework is designed to assist developing nations in addressing their debt challenges, especially in response to the economic impact of the COVID-19 pandemic.
However, the process has been criticised for delays, with China being accused of causing hold-ups – something it denies.
Additional Source;Business Insider
