IMF lauds Ghana on reaching Debt Treatment pact with creditors

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has welcomed Ghana on reaching the Debt Treatment Agreement with its Official Creditors, under the G20 Common Framework.

In a statement sighted on IMF official website, Madam Kristalina Georgieva said: “I welcome Minister of Finance Ofori Atta’s announcement that the Ghanaian authorities have reached an agreement in principle with their official creditors on a debt treatment, consistent with the objectives of the IMF-supported program”.

The agreement aims to restore macro-economic stability and debt sustainability, build resilience and lay the foundations for stronger and more inclusive growth.

She further applauded the Official Creditor Committee, especially the co-chairs, China and France, for their work to reach this agreement.

She indicated that this is another substantial milestone for the G20 Common Framework under which G20 creditors joined forces to agree on debt relief for Ghana.

“This agreement clears the path for IMF Executive Board consideration of the first review of Ghana’s three-year Extended Credit Facility Arrangement in the next few days. I look forward to continuing our fruitful collaboration with Ghana”, she stated.

Background

The minister of Finance, Ken Ofori Attah, over the weekend disclosed that the Government of the Republic of Ghana has reached an agreement with its Official Creditors under the G20 Common Framework, on a comprehensive Debt Treatment beyond the Debt Service Suspension Initiative.

Following the successful completion of the Domestic Debt Exchange Programme (DDEP) in 2023, this development constitutes a significant positive step towards restoring Ghana’s long-term debt sustainability.

“The Government of Ghana commended the support and cooperation of its Official Creditors in reaching this agreement, which demonstrates a mutual commitment to restoring debt sustainability in line with the International Monetary Fund (IMF) programme targets”, he emphasised.

The Government, he reinstated, is confident that this debt treatment, which entails significant flow relief during the programme period, will allow for the allocation of additional financial resources towards critical public investments, particularly in healthcare, education and infrastructure development.

According to the Minister, the terms of the agreed debt treatment are expected to be formalised in a Memorandum of Understanding between Ghana and Official Creditors, which will then be implemented through bilateral agreements with each member of the Official Creditor Committee.

This agreement, with the Official Creditors, paves the way for IMF Executive Board approval of the first review of the Fund-Supported programme, allowing for the next tranche of IMF financing of US$600 million to be disbursed.

The IMF Board approval should also trigger World Bank Board consideration of US$300 million Development Policy Operation (DPO) financing.

In addition, “the World Bank is expected to support the Ghana Financial Stability Fund with US$250 million to help address the impact of the Domestic Debt Exchange Programme (DDEP) on the financial sector. These disbursements are key for Ghana’s economic recovery and ambitious reform agenda”, he continued

With a decline in inflation to 23.2% in December 2023 from 54.2% in December, Reactive strong performance of the Ghana cedi, which reported a marginal depreciation of 7.2% between February and December 2023, compared to 28.4% during the same period in 2022;

overall real GDP growth of 2.8% for the first three quarters of 2023, higher than the 2023 initial GDP growth target of 1.5%.

“The agreement with Official Creditors will support ongoing engagements with Ghana’s commercial creditors, including bondholders. The Government of Ghana remains committed to reaching an agreement with its commercial creditors as soon as possible and takes this opportunity to thank all stakeholders”, he explained.

The Ministry reiterated its commitment to restoring Ghana’s long-term debt sustainability and strengthening macro-economic stability.

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