Research indicates Ghana is highly hit by a financial crisis. The entire West African continent struggles to emerge from the economic crisis, the IMF believes that Ghana will finalize a debt restructuring agreement with bilateral creditors within six to eight weeks, according to a Fund official.
A second release from a $3 billion International Monetary Fund emergency loan would be made possible by an agreement to restructure $5.4 billion in debt to China and members of the Paris Club of creditor nations.
Abebe Selassie, director of the IMF’s Africa section, expressed his hope that the fund’s Executive Board will have time to consider authorizing the payment before the year ends.
“Bilateral official debt is significant, but not the lion’s share of the debt challenge of Ghana,” Selassie stated to Reuters.
“Within this stock of obligations that Ghana has to bilateral creditors, the share to the Paris Club is fairly large, So we’re hoping that there will be a quick meeting of minds.”
When asked when creditors would come to an agreement that would allow the IMF to approve the next loan tranche, Selassie replied, “Hopefully within the next six to eight weeks.”
Ghana, an oil, cocoa, and gold producer, is negotiating a debt restructuring with its bilateral and commercial creditors in the midst of the greatest economic crisis in a generation. The country has been shut out of international financial markets due to the spiralling costs of its domestic debt.
According to a government presentation to investors, it aims to restructure $20 billion of the entire external debt, which was estimated to be around $30 billion at the end of 2022.
To effectively execute the $3 billion loan agreement from the IMF, Ghana plans to reduce interest payments on its external debt by around $10.5 billion over the course of the next three years.
It is reorganizing its external obligations through the Common Framework, a debt restructuring program designed for developing countries in response to the coronavirus pandemic by the Group of 20 major economies.
China has been blamed for holding up the process, a claim it disputes, and the process has been criticized for its delays.
“There’s been some learning on the Chinese side because they’re new creditors,” Selassie stated. “Hopefully going forward… we’ll be getting much more rapid response from all official creditors.”
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