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Ghana is confident that it will secure an Executive Board approval from the International Monetary Fund (IMF) for its $3 billion loan-support programme by the end of the second quarter of 2023. The reason for this confidence is that Ghana’s largest bilateral creditor, China, has agreed to speed up processes for its debt treatment.
According to Nirmala Sitharaman, Finance Minister for the Republic of India, “China [and all creditors] has agreed that it [debt treatment] has to be speedily dispensed. That is a great step forward because once you recognize that you have to do it in time and at the earliest, it moves faster. So, I expect a resolution for these countries.”
This development was announced during the Group of 20 Presidency’s (G20) second Finance Ministers and Central Bank Governors (FMCBG) press briefing at the ongoing 2023 IMF/World Bank Group (WBG) Spring Meetings in Washington DC, US. Sitharaman revealed that “we had around the table, Sri Lanka, Zambia, Ghana, Chad [which] has already been attended to, and Ethiopia. So, discussions were to ensure that the resolutions for these countries should happen on time. All stakeholders in this matter should come on board to talk.”
Finance Minister, Ken Ofori-Atta, said that during an investor presentation on the sidelines of the spring meetings, government is expecting an IMF Executive Board engagement and approval in the second quarter of 2023. He added that government is having preliminary and technical discussions with Bondholders Committee Advisors and Bilateral Creditors Secretariat and Technical Teams – as well as Bilateral and Private Creditors – which are expected to conclude by the end of April to gain financial assurances for the $3bn loan-support programme.
Mr Ofori-Atta emphasised that Ghana’s creditor engagement strategy would be anchored on transparency, good faith efforts for a collaborative process to restore debt sustainability, and fair treatment across creditors consistent with IMF debt sustainability analysis.
The country completed its Domestic Debt Exchange Programme (DDEP) and engaged its external creditors for debt operations for the loan facility, which is aimed at restoring macroeconomic stability while protecting the vulnerable.
The IMF, World Bank Group, and the Group of 20 Presidency (G20) have all pledged to increase concessional financing to Ghana to address the country’s current debt challenges. Kristalina Georgieva, Managing Director of IMF, said that “work will be undertaken on principles regarding cut-off dates, formal debt service suspension at the beginning of the process, treatment of arrears, and perimeter of debt to be restructured, including domestic debt [for Ghana and other developing countries].”
Officials from Ghana, including Members of Parliament (MPs) and Members of the Economic Management team, are with the Finance Minister and the Governor of the Bank of Ghana at the ongoing IMF/World Bank Spring Meetings to engage commercial, bilateral, and multilateral creditors to secure the IMF Board approval.
The restructuring of external debt is necessary to restore debt sustainability and ensure the full financing of the program.