$600m IMF Cash Delay: Tax expert says he foresees Ghana giving in to demands by the OCC

$600m IMF Cash Delay: Tax expert says he foresees Ghana giving in to demands by the OCC

Tax expert Dr Alex Ampaabeng, says he foresees the Government giving in to the terms of the Official Creditors Committee co-chaired by China and France (OCC) to secure the delayed second tranche of the $600m IMF cash.

This, according to him, is to ensure that the Government avoids a repeat of the liquidity crisis, declining confidence in the Ghanaian economy, and the rapid depreciation of the cedi that occurred last year – 2022.

“I see the Government giving in to the terms by the OCC and getting the IMF cash because the Government does not want to repeat the same situation that happened last year when the country was facing a liquidity crisis, fast depreciating cedi and was in a position where it badly needed the IMF to inject some monies into the economy,” he remarked.

Adding that, the Government is better off taking what is on the table than pushing for more.

He made the assertions speaking during the NorvanReports and Economic Governance Platform (EGP) X Space on the topic, “Ghana’s Second $600m IMF Cash; A Mirage or Reality.”

Ghana is requesting a 20% – 40% haircut and a maximum 5% interest rate and maturity not exceeding 20 years on debts owed to China and other members of the OCC as well as its Eurobond holders.

A haircut, China is unwilling to take on its loans made to Ghana. Then there is the disagreement on the “cut-off dates” for the debts. The “cut-off date” – refers to the date after which new loans will not be restructured.

While Dec. 31, 2022 is close to when Ghana defaulted, March 24, 2020 was being considered as a cut-off date because that was when the G20 introduced its debt service suspension initiative (DSSI) to help the world’s poorest countries cope with the fallout of the COVID-19 crisis.

The official creditors hold about $5.4 billion of Ghana’s $20 billion external debt that is being restructured.

Ghana needs to reach a restructuring deal with its official creditors to secure the International Monetary Fund executive board’s approval for the next $600 million payout from a $3 billion rescue loan.

Meanwhile, the International Monetary Fund (IMF) has rescheduled its board meeting to consider Ghana’s second review under the Fund programme and the disbursement of the second tranche of $600 million to January 11, 2024.

The IMF Board was expected to meet on Ghana’s programme for the second review in November 2023.

However, the challenge in reaching an agreement with China on the debt restructuring compelled the Fund to reschedule the date on two occasions; in the first week of December 2023 and December 21, 2023.