Official Creditors Committee $2.8 billion debt relief good
It is reported that the country’s Official Creditors Committee (OCC) has offered it a debt relief of $2.8 billion as a result of the debt restructuring exercise embarked upon by the out-gone Akufo-Addo government under the three-year Extended Credit Facility (ECF) arrangement with the International Monetary (IMF) in 2022.
The programme with the IMF initiated in 2022 was for a balance of payment support of $3 billion to restore macroeconomic stability.
It is good to hear that all the 25 participating countries in the OCC countries Ghana owes, have signed the Memorandum of Understanding (MoU) the government earlier reached with them as part of the country’s debt restructuring exercise.
This means there is no opposition to the debt relief, which may be due to compassion towards the negative effects of the country’s past debt episodes.
The committee is co-chaired by China and France.
For the purposes of education, we should note that the creditor groups are defined with respect to the debt contract under which they provide funds.
These are categorised into official and private creditors.
The International Monetary Fund, otherwise known as IMF, other multilaterals and bilateral governments constitute the Official Creditors whereas the private ones are banks, bondholders, and trade creditors.
The Committee of Creditors typically consists of financial creditors who have voting rights based on the proportion of their dues.
Typically, debt relief refers to measures to reduce or refinance debt to make it easier for the borrower to repay it.
Options are said to include forgiving a portion of the debt, lowering the interest rate, stretching payments over a longer period, or consolidating multiple debts into a single, lower-interest one.
Details of the options the country has been offered are yet to be made public to inform the world how $2.8 billion was arrived at, yet The Ghanaian Times believes the relief is a good one because of what the MoU offers.
It is said that the signing of the MoU in itself means the country is nearing the completion of its external debt restructuring process.
Besides, the debt relief provides the country with the much-needed fiscal space to implement reforms, stabilise the economy and rebuild investor confidence.
Furthermore, the debt relief is also said to be a significant step toward addressing the country’s debt sustainability challenges and positioning it for long-term economic recovery.
It is hoped that the debt relief can be a stimulus for economic growth in the country, with the focus on sectors that are critical to the everyday life of vulnerable people in the society.
The truth is that with the Mahama administration having just come into government and inherited certain economic problems, it has to be given the space to adopt prudent measures to resolve these problems.
Considering the fact that the three-year Extended Credit Facility (ECF) arrangement with the IMF in 2022 is to give the country a balance of payment support of $3 billion to restore macroeconomic stability, a $2.8-billion debt relief coming in any option(s) is substantial enough to make an upward move in the country’s economy and The Ghanaian Times is optimistic this will be evident in due time.