IMF Bailout: Board approval likely to be in May – Dr Theo Acheampong
Government’s ambitious goal of securing an IMF bailout by the end of March may not be realized due to negotiations with commercial creditors. According to Dr Theo Acheampong, an Economist and Political Risk Analyst, the country is more likely to secure Board approval for an IMF bailout by the end of April or May this year.
The Ghanaian government has been facing a challenging time dealing with its external debt. The country’s external debt stock stands at $29bn, of which commercial creditors hold a significant portion of around $13bn, while multilateral institutions hold approximately $8bn, or 30% of the country’s external debt stock. Dr Acheampong notes that negotiations for external debt restructuring with commercial creditors can drag on for a long time, making it difficult to meet the March deadline set by the government.
While the government had hoped to restructure its loans with China to help attain the IMF bailout by March, Dr Acheampong notes that Ghana’s debt to China, which stands at about $1.9bn, forms only a small portion of the country’s total external debt stock. Therefore, China is not a significant threat to Ghana’s ability to secure the IMF bailout program.
Dr Acheampong suggests that for the government to effectively reduce its external debt stock and secure the needed bailout program, it should focus on its biggest creditors, the commercial creditors, who hold a significant portion of the country’s debt. Being able to restructure their debt will be crucial to the government’s efforts to secure the IMF bailout.
Furthermore, Dr Acheampong recommends that for an effective negotiation with external creditors, the government should have all external creditors, including the Paris Club, China, commercial creditors, and IMF/World Bank, at the negotiating table simultaneously. This would enable the government to negotiate more effectively and expedite the process of securing the necessary bailout program.
Ghana’s external debt has been a significant concern for the government, and the country’s efforts to secure an IMF bailout program have been complicated by negotiations with commercial creditors. As such, the government must focus its attention on these creditors to reduce its external debt stock and attain the necessary bailout program. While the government’s March deadline may not be feasible, securing Board approval for the IMF bailout program by the end of April or May would still be a significant achievement for the country.