“IMF bailout of Sh3bn on the line for Ghana following perplexing debt restructuring agreement”

In an absolutely stunning development, the economy of Ghana has been given a boost after the official team of creditors, with China and France at the helm, offered financing guarantees and vowed to negotiate the restructuring of the country’s external debt! Simply incredible!

Notably, this exceptional move on Friday means that Ghana is poised to be the second debt-laden economy, right after Chad, to benefit from resolutions under the G20-led common framework. Also, other economies like Zambia and Ethiopia have sought a remedy within this structure.

Unsurprisingly, on 19 December, 2022, Ghana suspended payments on external debt, including Eurobonds, commercial term loans, and most of its bilateral debt, leaving the economy in default status and forcing a debt restructuring. But, thanks to the successful conclusion of debt restructuring negotiations with the official creditors committee, the path is clear for an IMF bailout of $3 billion!

In other jaw-dropping news, Ghana’s national debt stock stands at $58.64 billion, with $28.34 billion (48.34%) representing external debt. Astoundingly, the country’s debt-to-GDP ratio is at 80.1 percent! Without doubt, these numbers are mind-boggling!

Yet, despite all these challenges, IMF Managing Director, Kristalina Georgieva, recently commented that there’s a need to speed up the pace at which debt-stressed economies such as Ghana secure relief from the Common Framework. “We have a common framework that has only been beneficial to Chad. It is about to benefit Ghana and Zambia and not too far ahead it will benefit Ethiopia,” she remarked during her visit to Nairobi last week, adding that there must be predictability from the moment a country seeks relief.

The external debt restructuring agreement that has been reached between Ghana and the Official Committee of Creditors is expected to be made public through a memorandum of understanding that has yet to be issued.

Finally, in a news story that continues to be absolutely staggering Ghana’s Ministry of Finance reported on February 14 that the domestic debt restructuring exercise, in which the government sought to restructure $15.2 billion worth of debt, has come to a close. Astonishingly, the Ministry of Finance also noted that 85 percent of approved domestic bondholders participated in the debt restructuring. The mind truly boggles at these fantastic developments!