External Debt Restructuring: IMF expresses optimism over imminent agreement between GoG and official creditors
The International Monetary Fund (IMF) is optimistic that an agreement will soon be reached between the Official Creditor Committee and the Ghanaian government regarding the external debt restructuring. Ghana is facing a significant debt burden, with more than half of its $52.3 billion debt owed to external creditors, including Eurobond holders and some banks. A substantial reduction in the debt held by external creditors is seen as crucial for Ghana’s efforts to reduce its overall debt.
Julie Kozack, Director of Communications at the IMF, emphasized the importance of finalizing the restructuring of domestic debt for the Ghanaian government. Several organizations, including UK-based Fitch Solutions and the Economist Intelligence Unit (EIU), also believe that an agreement between Ghana and the Official Creditor Committee will be reached by the end of the year, paving the way for the external debt restructuring.
The IMF’s next steps for debt restructuring involve the Official Creditor Committee agreeing with the Ghanaian authorities on the specific modalities of debt relief, as well as continued engagement with external private creditors for relief on external debt. An IMF Mission is currently in Accra, Ghana, to assess the country’s performance and discuss policies for the first review of the program, with the review expected to be presented to the Executive Board in November 2023.
Ghana’s program supported by the IMF has three main objectives: restoring macroeconomic stability, ensuring debt sustainability, and laying the foundations for higher and more inclusive economic growth. This program includes a range of reforms designed to enhance resilience while protecting vulnerable populations.
Julie Kozack also highlighted the challenges facing sub-Saharan Africa as a region. The IMF will release its regional economic outlook in the coming weeks, which will provide detailed information on the region’s economic situation. Sub-Saharan Africa has been affected by a series of shocks, including the COVID-19 pandemic, rising living costs, and food insecurity.
Additionally, tightening global financial conditions have contributed to what the IMF refers to as the “funding squeeze” in the region. Some countries in Africa also have high levels of debt. However, Kozack noted that the continent’s youthful population presents significant opportunities for the region’s future development.
