Ghana secures MoU with Official Creditors on restructuring $5bn debt

Ghana has successfully negotiated a Memorandum of Understanding (MoU) with its official bilateral creditors for the restructuring of its outstanding debts, a crucial step towards stabilizing the country’s economy.

The breakthrough follows the official creditor committee’s and Ghana’s bilateral creditors’ receipt of necessary approvals from their respective governments and parliaments on the agreed terms for debt restructuring.

The preliminary agreement was reached in January 2024 but faced delays due to the drafting process of the MoU.

In January, Ghana secured “an agreement in principle” with bilateral creditors under the G20 Common Framework debt treatment, thereby facilitating the completion of the first review under its International Monetary Fund (IMF) programme.

This agreement led to Ghana receiving $600 million, supplemented by an additional $300 million from the World Bank under the Development Policy Operation Financing.

The successful negotiation of the MoU between Ghana and its Official Creditor Committee is aimed at restructuring a $5 billion debt burden.

Should the Official Creditor Committee, co-chaired by France and China, issue the MoU, it could potentially expedite the IMF’s second review report to reach the Management and Board by June 2024.

This would pave the way for the disbursement of $360 million to Ghana, bolstering the country’s international reserves and sending a positive signal to international donors and the investor community.

Managing Director of the IMF, Kristalina Georgieva, has stated that reaching a debt treatment deal with official creditors should provide the government with the fiscal space necessary to invest in critical sectors, thereby stabilizing the economy.

Source: Norvanreports