- Crucial agreement reached
- IMF disbursement imminent
- Path to program continuation clearing
The government has been handed a preliminary agreement from the Official Bilateral Creditor Committee, co-chaired by France and China, marking the final phase of negotiations regarding the restructuring of $5.4 billion in bilateral debts.
This development is anticipated to facilitate the disbursement of the third installment, totaling $360 million, from the International Monetary Fund’s (IMF) extended facility program with Ghana’s government. Minister of Finance, Dr. Mohammed Amin Adam, revealed these details during a press briefing in Accra.
Dr. Adam outlined that with guidance from financial and legal advisors, the government will scrutinize the memorandum of understanding (MoU) to swiftly finalize and execute the agreement with the creditor committee.
The endorsement of the MoU will pave the way for the IMF’s Executive Board to greenlight the second review of Ghana’s three-year program with the fund, thereby unlocking the awaited third tranche of $360 million, summing up the total disbursement to $1.56 billion under the program.
In the background, Ghana, as part of its commitment to the IMF program, was mandated to restructure both domestic and external debts.
Having requested debt treatment under the G20 Common Framework in December 2022, Ghana secured financing assurances from the Official Creditor Committee. Following a preliminary agreement reached on January 12, 2024, with the OCC, Ghana is now poised to formalize this agreement through the MoU, marking a significant stride in this endeavor.
Speaking on domestic affairs, Dr. Adam noted that during the debt restructuring program, the government’s financing avenues were limited primarily to Treasury Bills. Despite concerns raised by market participants regarding the relatively high T-Bill rates compared to pre-Domestic Debt Exchange Program (DDEP) rates, Dr. Adam assured that the government remains committed to meeting its financial obligations, with the third coupon of the DDEP set to be honored in August 2024.
Highlighting signs of economic stabilization, Dr. Adam pointed out the government’s progress in stabilizing key economic indicators, such as growth, primary and fiscal balances, as well as declining interest rates and inflation.
While acknowledging some exchange rate instability due to seasonal factors and the strengthening US dollar, Dr. Adam expressed confidence in further improving these economic metrics post-DDEP.
Turning to Eurobond negotiations, Dr. Adam highlighted significant progress made with Eurobond investors to restructure Ghana’s $13 billion debt. He underscored the complexities posed by IMF Debt Sustainability Thresholds, which guided discussions with Eurobond holders.
Despite intensive negotiations leading up to the IMF Spring meetings, Dr. Adam expressed optimism in reaching a mutually beneficial solution acceptable to all stakeholders, reaffirming the government’s commitment to promptly resolving these matters in line with IMF program parameters.
