The Government of Ghana has announced that it expects to receive financial assurances from the Official Creditor Committee by the end of April 2023, paving the way for International Monetary Fund Board approval in May 2023.
This move towards debt restructuring comes after the government of Ghana experienced a breach in three out of five International Monetary Fund/World Bank LIC Debt Sustainability Framework (DSF) indicators in 2022.
The government aims to meet the DSF targets, which can be achieved through debt restructuring.
In an investors’ presentation jointly organized by the Ministry of Finance and the Bank of Ghana, Ghana’s Finance Minister, Ken Ofori-Atta, stated that the government expects to complete Comprehensive Debt Exchange Operations by April 2023.
Additionally, the finance minster stated that the government hopes to begin negotiations with commercial creditors to reach an agreement in principle on a term sheet for the restructuring of Eurobonds.
Meanwhile, two thirds of the $30.5 billion external debt are expected to be included in the External Debt Restructuring perimeter.
Multilateral Development Institutions and Non-Resident investors held $8.8 billion and $1.6 billion respectively of Ghana’s total debt stock as of the end of December, 2022.
The restructuring exercise aims to meet the International Monetary Fund/ World Bank Lower Income Country (LIC) Debt Sustainability Framework (DSF) targets, which require a reduction in debt ratios and an increase in fiscal space.
The debt restructuring process is seen as necessary for Ghana’s economic development and long-term growth prospects. With the aim of restoring debt sustainability and improving fiscal space, the government of Ghana is taking bold steps to address the challenges of external debt through debt restructuring.
Finance Minister Expects IMF Board Approval In May
Finance Minister, Ken Ofori-Atta, says Ghana should expect an International Monetary Fund (IMF) Board approval for a programme by the close of May 2023.
Speaking at the Investors Presentation Forum by the Republic of Ghana, Ofori-Atta emphasized that Ghana has made significant progress and called on external creditors to support its efforts in securing the programme, hence the need for it to get approval as soon as possible.
“We understand this is a challenging time for all of you to commit and offer a financial support to all of you. But please be assured we are fully committed with you and your advisors to ensure an equitable solution.”
Finance Minister, Mr. Ken Ofori Atta
Mr. Ofori-Atta said access to the international capital market is key on the agenda of government to restore macroeconomic stability.
He maintained that government is committed to fair debt treatment with its commercial creditors.
“Government intends to deepen the relationship with its external creditors. We reaffirm our commitment to work with our private and commercial creditors in all of our engagements.”
Finance Minister, Mr. Ken Ofori Atta
Mr. Ofori-Atta and the Governor of the Bank of Ghana, Dr. Ernest Addison, are leading a high-level Ghana delegation to the World Bank and IMF Spring Meetings, ongoing in Washington D.C.
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