The Government of Ghana has announced that it has reached an agreement with its Official Creditors under the G20 Common Framework, marking a significant step towards restoring the country’s long-term debt sustainability.
The agreement, which goes beyond the Debt Service Suspension Initiative, follows the successful completion of the Domestic Debt Exchange Program in 2023.
The Government of Ghana commends the support and cooperation of its Official Creditors in reaching this agreement, highlighting the mutual commitment to restoring debt sustainability in line with the International Monetary Fund (IMF) program targets.
The debt treatment agreement is expected to provide substantial flow relief during the program period, enabling the allocation of additional financial resources for critical public investments, particularly in healthcare, education, and infrastructure development.
The terms of the agreement will be formalized in a Memorandum of Understanding between Ghana and its Official Creditors and will subsequently be implemented through bilateral agreements with each member of the Official Creditor Committee. The Government of Ghana looks forward to prompt implementation of the agreed terms through further engagements.
This agreement with Official Creditors lays the groundwork for the approval of the first review of the Fund-supported IMF program by its Executive Board. It will allow for the disbursement of the next tranche of IMF financing amounting to $600 million.
Furthermore, World Bank consideration of $300 million Development Policy Operation financing is expected to be triggered by the IMF Board Approval.
Additionally, the World Bank is expected to provide support of $250 million to the Ghana Financial Stability Fund to address the impact of the Domestic Debt Exchange Program on the financial sector.
These disbursements are crucial for Ghana’s economic recovery and ambitious reform agenda.
Ghana has shown positive economic indicators, with a decline in inflation to 23.2% in December 2023 from 54.2% in December 2022. The Ghana cedi has also performed relatively strongly, experiencing a marginal depreciation of 7.2% between February and December 2023 compared to 28.4% during the same period in 2022. Additionally, the country has achieved an overall real GDP growth of 2.8% for the first three quarters of 2023, surpassing the initial GDP growth target of 1.5%.
Today’s agreement with Official Creditors will contribute to ongoing negotiations with Ghana’s commercial creditors, including bondholders. The Government of Ghana is determined to reach an agreement with its commercial creditors in the near future and expresses gratitude to all stakeholders.
The Ministry of Finance reiterates its commitment to restoring Ghana’s long-term debt sustainability and strengthening macroeconomic stability.
Find copies of the statement attached:
By Vincent Kubi