Gov’t engages 60 banks to finalise 7% of debt restructuring

By Joshua Worlasi AMLANU

Ghana has made progress in its debt restructuring efforts, with only seven percent of its external debt left to be resolved.

The remaining portion primarily involves negotiations with commercial creditors and government is working to finalise agreements that align with previously established debt treatment frameworks.

Finance minister Dr. Cassiel Ato Baah Forson, speaking during a media briefing on Ghana’s Memorandum of Understanding (MoU) signing with the Official Creditor Committee (OCC), emphasised government’s commitment to expediting discussions with commercial creditors.

“The remaining seven percent of the debt, which amounts to US$2.7billion, involves negotiations with around 60 international banks. Unlike bondholders and official creditors, these banks do not belong to a group; meaning each must be engaged individually.

“In contrast, under the IMF G20 framework, official creditors and bondholders can be grouped together for more streamlined negotiations. However, with these banks, each engagement will need to be handled separately,” he explained.

The minister noted that although this seven percent may seem small, it presents a complex challenge as it requires working with 60 different institutions… each with its own unique terms.

“The process has already begun, and government is committed to concluding it as swiftly as possible. A timeline for engaging the banks will be announced in coming days, as government works to finalise restructuring this portion of the debt,” he said.

He assured that these engagements will be guided by the ‘most favoured creditors’ clause and comparability of treatment principle to ensure fair terms for all parties.

The minister also confirmed that the nation has successfully signed a Memorandum of Understanding (MoU) with all 25 participating creditor countries, a major step in its debt restructuring process and restoring debt sustainability under the IMF programme.

Significant Progress in Debt Restructuring

The nation’s debt restructuring has been a crucial element of its broader economic recovery strategy, particularly under the International Monetary Fund (IMF) programme that the country embarked on under the previous administration.

The programme required a comprehensive restructuring of Ghana’s debt to restore sustainability, with key targets including reducing the debt-to-GDP ratio to below 55% by 2028 and ensuring the debt service-to-revenue ratio does not exceed 18% from that year onward.

Government has already completed several critical phases of the restructuring process. In 2023, Ghana successfully executed a domestic debt exchange programme involving approximately GH¢203.4billion.

This was followed by agreements with external creditors under the G20 Common Framework. On June 11, 2024, Ghana reached an agreement with the OCC to restructure US$5.1billion in official bilateral loans – securing an estimated US$2.8billion in debt service relief between 2023 and 2026.

Shortly after, on June 19, 2024, government reached a deal with Eurobond holders to restructure US$13.1billion in bonds; leading to a debt cancellation of approximately US$4.7billion and debt service savings of about      US$4.4billion for the same period.

These agreements marked major milestones in the country’s debt restructuring process, but the remaining seven percent of commercial debt remains unresolved.

The minister acknowledged contributions of external creditors and urged them to support the final phase of restructuring.

He reiterated government’s commitment to accelerating negotiations with commercial creditors to reach a mutually beneficial solution.

“We take this opportunity to appreciate the efforts and support so far by external commercial creditors and urge them to support us to complete this process as soon as possible,” he said.

Government has assured that this last stage of restructuring will not derail the progress made so far. Dr. Forson stressed that with the majority of restructuring completed, Ghana’s focus will now shift toward economic recovery and long-term growth.

“With this progress on the debt restructuring, we will now focus on our economic recovery through the implementation of an ambitious reform agenda, fostering strong, resilient and inclusive growth for all Ghanaians,” he noted.

Ghana’s debt restructuring process began formally in December 2022 when the country requested debt treatment under the G20 Common Framework. By January 2024, a formal request for relief had been submitted, leading to extensive negotiations with creditors.

The eventual agreement with the OCC in June 2024 marked a turning point, allowing government to restructure its official bilateral loans under a framework that ensures debt sustainability.

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