The International Monetary Fund (IMF) is nudging the Ghanaian government to reach an agreement on external debt restructuring with the Official Creditor Committee.
Director of Communications at the IMF, Julie Kozack, noted during a press conference that the agreement must be done within the shortest possible time as discussions are ongoing.
“The next steps on debt restructuring are for the Official Creditor Committee to agree with the authorities on the specific modalities of debt relief and for the authorities to continue to engage with their external private creditors for relief on their external debt. These discussions are ongoing, and we hope that the OCC, the Official Creditor Committee, and the Ghanaian authorities will find an agreement soon. The government has recently finalized the restructuring of its domestic debt”, Julie Kozack said.
Ghana’s total debt, which amounts to $52.3 billion, has over half of it owned by external creditors, including Eurobond holders and certain banks. Consequently, a substantial reduction from external creditors is seen as crucial for the country’s efforts to significantly reduce its debt burden.
Both UK-based Fitch Solutions and the Economist Intelligence Unit (EIU) share the belief that Ghana will reach an agreement with the Official Creditor Committee by the end of the year, paving the way for the commencement of external debt restructuring.
An IMF Mission is presently in Accra, Ghana, to evaluate performance and engage in discussions regarding policies for the first review of the program. The objective is to present this review to the Executive Board in November 2023.
Ghana’s program encompasses three key goals: restoring macroeconomic stability, ensuring the sustainability of debt, and establishing the groundwork for increased and more inclusive economic growth. The program includes a comprehensive set of reforms aimed at enhancing resilience while safeguarding the most vulnerable segments of the population.
Regarding the sub-Saharan Africa region, Julie Kozack mentioned that the Fund will be publishing its regional economic outlook in the forthcoming weeks.
“We will be releasing that outlook and that will contain detailed information on the region. I think it’s fair to say that the region is still undergoing what we called in April [2023] the big funding squeeze. The region has been very much affected by the succession of shocks, the pandemic, the cost of living crisis, food insecurity. And in addition, the region has been affected, of course, by tightening global financial conditions, and that has led to what we’re calling the funding squeeze”.
“All of that has happened in a situation where the region is facing also, in some countries, high debt. So the challenges, of course, are very significant in Africa. But I would be remiss if I don’t also mention the opportunities in the sense that Africa is a continent with a youthful population, which presents tremendous opportunities for the region as well”.