The government has announced that it has reached an agreement with its Official Creditors under the G20 Common Framework on a comprehensive Debt Treatment under Ghana’s Extended Credit Facility programme with the International Monetary Fund (IMF).
The agreement with the Official Creditors paves way for the IMF Executive Board to approve the first review of the Fund-supported programme to allow for the second tranche of IMF financing of US$600 million to be disbursed under the three-year $3 billion deal.
A statement issued by the Ministry of Finance on Friday and copied to the Ghanaian Times said, “The development constitutes a significant positive step towards restoring Ghana’s long-term debt sustainability.”
“The Government of Ghana commends the support and cooperation of its Official Creditors in reaching this agreement, which demonstrates a mutual commitment to restoring debt sustainability in line with the IMF programme targets,” it said.
The Finance Ministry said the government was confident that “this debt treatment, which entails significant flow relief during the programme period, will allow for the allocation of additional financial resources towards critical public investments, particularly in healthcare, education, and infrastructure development”.
The Finance Ministry said the terms of the agreed debt treatment were expected to be formalised in a Memorandum of Understanding between Ghana and Official Creditors, which would then be implemented through bilateral agreements with each member of the Official Creditor Committee.
“The Government of Ghana looks forward to further engaging with the Official Creditors to ensure prompt implementation of the agreed terms. The IMF Board Approval should also trigger World Bank Board consideration of US$300 million Development Policy Operation (DPO) financing,” the statement said.
According to the Ministry of Finance, the World Bank was expected to support the Ghana Financial Stability Fund with $250 million to help address the impact of the Domestic Debt Exchange Programme on the financial sector.
“These disbursements are key for Ghana’s economic recovery and ambitious reform agenda. Today’s agreement with Official Creditors will support ongoing engagements with Ghana’s commercial creditors, including bondholders,” the statement said.
It said the government of Ghana remained committed to reaching an agreement with its commercial creditors as soon as possible and takes this opportunity to thank all stakeholders, and said, “The Ministry of Finance hereby reiterates its commitment to restoring Ghana’s long-term debt sustainability and strengthening macroeconomic stability.”
Ghana in July 2022 sought a $3billion three-year deal ECF with the IMF to ensure debt sustainability and to help restore macroeconomic stability.
Consequently, the country in May 2023 received the first tranche of $600 million from the IMF under the ECF following the successful completion of the Domestic Debt Exchange Programme.
Meanwhile, the International Monetary Fund in a statement issued by Ms Kristalina Georgieva, Managing Director of IMF, after the announcement by Ghana’s Finance Ministry, said, “I welcome Minister of Finance Ofori-Atta’s
announcement that the Ghanaian authorities have reached an agreement in principle with their official creditors on a debt treatment, consistent with the objectives of the IMF-supported programme, which aims to restore macroeconomic stability and debt sustainability, build resilience, and lay the foundations for stronger and more inclusive growth.”
“I want to thank the Official Creditor Committee, especially the co-chairs, China and France, for all their work to reach this agreement. This is another substantial milestone for the G20 Common Framework under which G20 creditors joined forces to agree on debt relief for Ghana.This agreement clears the path for IMF Executive Board consideration of the first review of Ghana’s three-year Extended Credit Facility Arrangement in the next few days. I look forward to continuing our fruitful collaboration with Ghana,” said IMF.
BY KINGSLEY ASARE