Ghana needs no further adjustment for External Creditors debt treatment — IMF
The International Monetary Fund (IMF) says Ghana does not need further adjustment to reach an agreement with its External Creditors for the restructuring of some US$20 billion debt.
Rather, it is incumbent upon creditors to come to terms with the country, which is awaiting the Fund Executive Board approval for a second tranche of US$600 million for its US$3bn loan-support programme.
Mr Abebe Aemro Selassie, Director, African Department, IMF said this when responding to a question posed by the Ghana News Agency at a press briefing on Friday, October 13, 2023, in Marrakech.
Ghana temporarily suspended some of its external debt, including Eurobonds, commercial and bilateral loans in December 2022, and has since been awaiting conclusion on debt treatment with its external creditors to resume payment.
“Action is needed from the creditors’ side; Ghana has done its fair share, and it’s for creditors to take the next steps, and we’re not going to ask the government to do more adjustment because creditors haven’t asked either,” Mr Selassie said.
He pledged the Fund’s commitment in providing the necessary information “so that creditors can move, allowing us [IMF Staff Mission] to go the Board as soon as possible.”
Mr Selassie noted that, while it took nine months for Zambia to get the Official Creditors Committee to be created, in Ghana’s case, it was fairly rapid, as it took some months for that to be done.
“That allowed us to go to the Board and get the programme, and we’re very hopeful that ongoing discussions among official creditors will also expeditiously allow us to conclude the upcoming review [for the second tranche],” he said.
The African Director said the Fund was pleased with the progress the country had made with the programme since it was approved by the Board in May 2023.
He explained that prior to the start of the US$3bn loan-support Post-COVID-19 Programme of Economic Growth (PC-PEG), Ghana had taken important steps to address the large macroeconomic imbalances – the root cause of the current crisis.
Currently, government officials are taken part in the IMF/World Bank annual meetings in Marrakech, where they are expecting to cement agreement with external creditors, leading to the singing of a pact for debt treatment.
“We’re exchanging and validating data and the possible contours of the external debt programme, I and we’re hopeful that it will end well,” Mr Kojo Oppong Nkrumah,
Information Minister told the Ghana News Agency on Thursday. “Once we’re done with some of the groups, for example, the Official Creditors Committee, we’ll be able to proceed with an MoU, and the details will proceed,” he said.
“We’re optimistic that our bilateral creditors will deliver the MoU in time in November for our Board as we continue our engagement, which have continued to be positive,” Mr Ken Ofori-Atta, the Finance Minister, said last Friday.
This was after Ghana reached a Staff-Level Agreement with the IMF for the first review of its US$3 billion Extended Credit Facility (ECF) for the disbursement of a second tranche of US$600 million, pending the Fund’s Board approval.
Economic crisis, resulting from the impact of the COVID-19 pandemic, tightening global financial conditions, and Russia-Ukraine war, pre-existing fiscal and debt vulnerabilities, made the government go the IMF for a loan-support programme in 2022.
However, strong signs of macroeconomic recovery and stability have been observed in recent times under the implementation of the IMF loan-support programme.
The country’s Gross Domestic Product (GDP) growth has averaged of 3.2 per cent for the last two quarters of 2023, a 0.2 percentage higher than the same period in 2022.
Headline inflation had dropped to 40.1 per cent from 43.1 per cent in July and 42.5 per cent in June, while the Cedi depreciated on year-to-date cumulatively by 23.5 per cent compared to the same period in 2022.