GHANA is set to request a debt relief via the G20 Common Framework programme to ensure debt and macroeconomic sustainability, Reuters has reported.
The Common Framework process, set up by the Group of 20 leading economies in 2020, was in response to the COVID-19 pandemic.
According to the international newswire, Ghana had reached out to the Paris Club of creditor countries in December 2022 to ask for assurances that the Common Framework process could be expedited.
Ghana must restructure its debt to get the final approval to access the IMF funds.
The country reached a Staff Level Agreement (SLA) with the International Monetary Fund (IMF) on a $3-billion three-year Extended Credit Facility to restore debt sustainability, following six months of negotiation after the government announced its intention to engage the IMF for balance of payment support.
President Nana Addo Dankwa Akufo-Addo in July 2022 directed the Finance Minister, Ken Ofori-Atta, to begin formal engagements with the IMF for a Fund-support.
According to Reuters, a Paris Club official had told it that the group had received a letter from Ghana’s government, but declined to give further detail.
It said a third source, who is familiar with the thinking of the IMF, said Ghana going through the Common Framework programme was under discussion, and the most probable outcome as well as the preferred option for the Paris Club.
Reuters said only poorer nations were eligible to request a Common Framework programme, adding that a country aiming to restructure its debt can also do so by negotiating individually with each creditor.
It said the Common Framework, designed to allow for speedy debt reworks, had been widely criticised for its glacial progress, indicating that Chad, Ethiopia and Zambia signed up in early 2021, while Chad secured a deal with creditors in November, Zambia was still locked in talks. And Ethiopia’s progress was held up by civil war.
In a related development, Myjoyonline.com reported that the Managing Director of the IMF, Kristalina Georgieva, had disclosed that the Fund was engaging some international creditors for a possible cancellation of Ghana’s debts.
According to her, the move was targeted at debt cancellation for countries with distress debt challenges.
She mentioned such countries as Chad, Ethiopia, Zambia, Ghana, Lebanon, and Sri Lanka.
“It is very important for their people that we find solution to the debt problem, but the risk of contagion is not as high,” she said on an American news channel, CBS.
Ms Georgieva explained that current global condition made it difficult for debt distressed countries to honour their debt obligations due to international liquidity squeeze.
“If the debt list continues to grow, let us remember that 25 per cent of emerging markets are tragically stressed territory” she warned, adding that global economic giants themselves were struggling due to COVID-19 and the invasion of Ukraine by Russia.
According to Citinewsroom.com, Ghana’s public debt stood at GH ₵ 467.4 billion ($47.7 billion) in September 2022, of which about $4 billion was bilateral, according to the Institute of International Finance.
It said of that $1.9 billion was held by Paris Club countries and $1.7 billion by China.
According to the government, the debt sustainability analysis it conducted indicated that the country’s debt was unsustainable, hence the need for an IMF supported programme.
BY TIMES REPORTER