Debt Restructuring: Ghana may not be lucky the 3rd time, says Seth Terkper
Former Finance Chief, Seth Terkper, has warned of the possibility of Ghana being unsuccessful in getting creditors to agree to a debt restructuring agreement should the country once again find itself in a position where it is debt-distressed and unable to repay its debts.
According to the former Finance Chief, the recent debt default on external debts and the subsequent success of the government in its external debt restructuring programme marks the second time the country has had to plead with creditors to provide debt relief.
The first instance was in 2004 when the country went into HIPC (Highly Indebted Poor Country categorisation), for which the country’s debts were forgiven.
Speaking to the media in a dialogue on Ghana’s IMF Programme and Debt Restructuring on Thursday, July 4, 2024, Mr Terkper noted that there is a need for the country to have a ‘sober reflection’ following the recent debt default asserting that Ghana may not be lucky the third time.
“There is the need for sober reflection, as a nation this legacy of default after HIPC is not likely to make us a 3rd time lucky,” he quipped.
Ghana, some weeks ago, successfully concluded its debt restructuring program with official creditors and Eurobond holders.
Ghana restructured $5.1 billion in debt with official creditors and $13.1 billion with Eurobond holders, achieving substantial financial relief.
According to the Finance Minister, Dr. Mohammed Amin Adam, the debt restructuring has secured for Ghana some $8 billion in savings.
The restructuring efforts, part of a broader strategy to meet IMF targets, include delayed interest payments and extended maturity dates with bilateral creditors.
To align with the IMF’s requirements, Ghana aims to reduce its debt-to-GDP ratio to 55% by 2028, down from a projected 109% prior to the restructuring.
Ghana’s debt restructuring journey began over a year ago, following an agreement in principle with bilateral creditors under the G20 Common Framework for Debt Treatment.
This set the foundation for subsequent negotiations with Eurobond holders, culminating in the current agreement.
The successful restructuring marks a critical step in stabilizing Ghana’s economy and achieving long-term fiscal sustainability.
