Finance Minister, Ken Ofori-Atta, intends to protect loans received from the African Export and Import Bank (Afreximbank) from the current debt restructuring efforts.
As Ghana faces a severe economic crisis and seeks to renegotiate $20 billion in external debt to improve terms and recover from financial challenges, loans from Afreximbank are expected to be exempted.
To qualify for the next tranches of the $3 billion loan agreement with the International Monetary Fund (IMF), Ghana aims to reduce its external debt repayments by $10.5 billion over the next three years.
Despite the challenges, Ofori-Atta expressed determination to exempt Afreximbank as a lending partner, stating, “I have to find a way to do it. It’s difficult, but we will strive and find a solution.” He acknowledged Afreximbank’s invaluable support during Ghana’s most difficult times.
In July 2022, when Ghana faced limited access to global capital markets due to high yields on its international bonds, credit rating downgrades, and currency depreciation, the country secured a $750 million loan from Afreximbank.
Afreximbank argues that its loans should be exempt from debt restructuring since it is classified as a multilateral development lender. The bank refers to the treaty signed by Ghana, which prohibits subjecting its loans to moratoriums and restructuring.
The treatment of Afreximbank loans has yet to be addressed by the creditor committee, which includes the Paris Club and oversees negotiations with developed creditor nations.
Ghana’s debt restructuring involves approximately $5.4 billion owed to China and Paris Club members out of the total external debt of $20 billion as of the end of 2022. The country’s overall external debt stood at $30.5 billion.
In the coming weeks, Ghana aims to reach agreements with its bilateral creditors, as stated by Ofori-Atta during a recent press conference.
The loan obtained by Ghana from Afreximbank last year amounted to up to $750 million, with a seven-year tranche split into €100 million ($109.3 million) at an interest rate of 6.49%, including fees, and $101 million at 9.55%. Another tranche of $350 million was for a duration of 10 years with an interest rate of 9.33%, as approved by Parliament.