President Nana Addo Dankwa Akufo-Addo has announced that many of the country’s stalled projects will soon resume following successful debt restructuring negotiations.
During the presentation of credentials to nine newly appointed diplomats at the Jubilee House, the President elaborated on the positive outcomes of these negotiations and their impact on Ghana’s development.
The President highlighted the completion of three key debt restructuring initiatives: domestic debt restructuring, external bilateral debt restructuring, and commercial bondholders debt restructuring.
These measures have offered significant financial relief, paving the way for renewed attention to crucial infrastructure and development projects.
“These agreements have provided much-needed breathing space and put our domestic debt-to-GDP ratio on a clear downward trend,” President Akufo-Addo said.
“The successful negotiations mean that bondholders will provide US$4.4 billion in cash flow relief during the IMF programme, in addition to the cancellation of US$4.7 billion of the debt stock.”
The president emphasized the importance of domestic debt restructuring, which saw a high participation rate of nearly 95%.
Coupon rates were significantly lowered from 21% to an average of 9%, and maturities were extended, alleviating the immediate local debt service burden that previously accounted for over 40% of the country’s tax revenues.
This restructuring initiative has set the domestic debt-to-GDP ratio on a trajectory to reach 55% by the end of 2028. Additionally, the restructuring of external bilateral debt has been a pivotal step in Ghana’s economic recovery.
The agreement with bilateral creditors, coordinated by the Ghana Official Creditor Committee (OCC) and co-chaired by France and China, led to the restructuring of US$5.1 billion of Ghana’s debts.
This deal is anticipated to provide cash flow relief of around US$2.8 billion, or GHC39 billion, in deferred debt service between 2023 and 2026, to be repaid later at a lower interest rate.
“The Agreement with our Bilateral Debt Holders will lead to a cash flow relief of around US$2.8 billion or GHC39 billion in debt service,” President Akufo-Addo stated. “This will enable us to resume and complete many projects that are vital for our nation’s progress.”
The successful negotiations have also set the stage for the IMF’s Executive Board to meet and approve Ghana’s Second Review of the Fund Programme, leading to an additional disbursement of US$360 million to support the initiative. This funding will further enhance Ghana’s efforts to rejuvenate its economy and expedite development projects.
A key milestone in the debt restructuring process is the agreement with commercial bondholders. The restructuring of US$13.1 billion in debts resulted in substantial savings for the government, including the elimination of US$4.7 billion, or GHC65 billion, from the debt stock. Additionally, Ghana will save $4.4 billion, or GH¢60 billion, in debt service, providing much-needed financial relief during the IMF Programme.
The president praised the Ministry of Finance, under the leadership of Mohammed Amin Adam, for their dedication in securing these landmark agreements. He underscored the significance of these achievements in generating the financial flexibility required to restart and finalize stalled projects nationwide.
“These achievements are unprecedented in the history of country debt restructurings,” President Akufo-Addo stated. “The Minister for Finance and his team at the Ministry of Finance are to be warmly applauded for this historic achievement.”
With the successful debt restructuring initiatives in place, the government is now well-positioned to focus on revitalising critical infrastructure and development projects that have been stalled due to financial constraints. These projects, which include improvements in healthcare, education, transportation, and other essential sectors, are vital for Ghana’s progress and development.
The president’s announcement has been met with optimism and renewed hope for Ghana’s economic future. The resumption of stalled projects will not only boost the country’s development efforts but also create jobs and improve the quality of life for Ghanaians.
As Ghana continues on its path to economic recovery, the successful debt restructuring and the resumption of stalled projects signify a significant step forward in the nation’s journey towards sustainable growth and prosperity.