Creditors’ opposition to 40% haircut delay release of $600m second tranche
Ghana missed out on the November 1, 2023 timeline set in the IMF programme for the release of the second tranche of the $3 billion bailout facility.
The delay in the release of the $600m second tranche according to the Dean of the Business School of the University of Cape Coast, Professor John Gatsi, is due to the unwillingness of Ghana’s external creditors to accept the 40% haircut proposal by Finance Minister Ken Ofori-Atta.
Ghana, led by the Finance Chief Ken Ofori-Atta is currently discussing with its external creditors for debt relief worth $10.5 billion.
The Finance Minister earlier submitted proposals to its commercial creditors seeking a haircut of up to 40% and additional debt rework with its bilateral creditors including China and the Paris Club.
But speaking on TV3, Prof Gatsi noted that, “The delay is occasioned by the inability of the government of Ghana and the creditors to agree on what is required of them. The Government of Ghana is pleading with the creditors to accept the certain elongation of maturity of the debts and some cuts, about 30 to 40 percent on the interest or the coupons that they expect.”
“That is where the disagreement is coming from. As things are it seems part of the creditors such as bilateral and multilateral are sort of very soft but it was also indicated that some creditors are excused from the debt exchange programs they will not be affected. It is very difficult for commercial creditors to see a chunk of the interest wiped away, I believe that is where the disagreement is and they have not come to terms with it yet. That is why we couldn’t meet the target,” he added.
Ghana received the first tranche of $600 million in May this year. The cash, according to the Finance Ministry, was to help restore macroeconomic stability, sustain the country’s debts and lay a strong foundation for inclusive growth.
“The first tranche of $600million of Ghana’s low interest of $3billion Extended Credit Facility has been received to help restore macroeconomic stability, sustain the country’s debts and lay a strong foundation for inclusive growth,” the Ministry tweeted on May 20, 2023.
