The former Minister of Finance, Seth Terkper, has raised concerns over the potential jeopardy to Ghana’s international cash flows if discussions on external debt restructuring come to a standstill.

Despite this apprehension, Terkper remains cautiously optimistic about the country’s ability to secure an agreement by the end of the upcoming week.

In a statement quoted by norvan reports, Terkper remarked, “I hope we can avert not reaching a deal with the creditors, otherwise, unless we get some waiver, flows from the IMF and World Bank will be in jeopardy, and we will still be locked out of the international capital market. I hope the Government will rally and meet the required conditions so that we can overcome these current economic challenges.”

Echoing Terkper’s sentiments, the current Minister of Finance, Ken Ofori-Atta, also conveyed confidence in the government’s potential to finalize an agreement by the end of the coming week.

Ofori-Atta addressed the issue, stating, “My hope is that by the end of next week, we’ll have what we need. One of the key issues is the cut-off date and ensuring that there is comparability of treatment.”

IMF, World Bank funds in limbo should external debt restructuring talks be stalled – Seth Terkper

The former Minister of Finance, Seth Terkper, has raised concerns over the potential jeopardy to Ghana’s international cash flows if discussions on external debt restructuring come to a standstill.

Despite this apprehension, Mr Terkper remains cautiously optimistic about the country’s ability to secure an agreement by the end of the upcoming week.

In a statement quoted by norvan reports, Mr Terkper remarked, “I hope we can avert not reaching a deal with the creditors, otherwise, unless we get some waiver, flows from the IMF and World Bank will be in jeopardy, and we will still be locked out of the international capital market. I hope the Government will rally and meet the required conditions so that we can overcome these current economic challenges.”

Echoing Mr Terkper’s sentiments, the current Minister of Finance, Ken Ofori-Atta, has also conveyed confidence in the government’s potential to finalize an agreement by the end of the coming week.

Mr Ofori-Atta addressed the issue, stating, “My hope is that by the end of next week, we’ll have what we need. One of the key issues is the cut-off date and ensuring that there is comparability of treatment.”

In December 2022, Ghana experienced a default on a significant portion of its external debts, leading to its exclusion from international capital markets and a subsequent surge in debt costs. This crisis further intensified an economic downturn characterized by a depreciating currency and soaring inflation rates.

To address its financial predicament, Ghana is required to negotiate a restructuring deal with its official creditors, a crucial step for obtaining the International Monetary Fund (IMF) executive board’s approval for the next disbursement of $600 million from a $3 billion rescue loan.

The official creditors, holding approximately $5.4 billion of Ghana’s total external debt amounting to $20 billion undergoing restructuring, were considering two possible cut-off dates: March 2020 and December 2022, as reported by Reuters in September.

While December 31, 2022 aligns closely with Ghana’s default timeline, March 24, 2020, was also under consideration as a cut-off date. This date holds significance as it marks the introduction of the G20’s Debt Service Suspension Initiative (DSSI), designed to assist the world’s poorest countries in coping with the repercussions of the COVID-19 crisis. Notably, Ghana did not participate in the DSSI.

In response to the deliberations on cut-off dates, Ghana’s Finance Minister, Ofori-Atta, emphasized the country’s adaptability to either scenario. When queried about a preferred date, he commented, “We can manage either way. So the issue is (for) the membership of the OCC to get comfortable with how it impacts them.” Ofori-Atta further highlighted the importance of ensuring comparability of treatment, with China and France serving as co-chairs of the official creditor committee and exerting significant influence on the decision-making process.