Ghana Concludes Debt-Relief Agreement, Facilitating Access to IMF Funding

Ghana has successfully secured a debt-relief deal with its bilateral lenders, including the Paris Club and China, marking a crucial step toward unlocking new financing from the International Monetary Fund (IMF). The agreement positions Ghana to access an additional $600 million as part of its $3 billion bailout program.

Finance Minister Ken-Ofori Atta highlighted the significance of the deal, emphasizing its role in enabling access to IMF funding. The agreement also has the potential to unlock an additional $300 million in funding from the World Bank’s development policy financing. An extra $250 million in support for the Ghana Financial Stability Fund is also anticipated.

A key condition for the program involves the Ghanaian government reducing its public debt-to-GDP ratio to 55% by 2028. This target contrasts with the earlier forecast of Ghana’s debt-to-GDP ratio reaching 109% before the program’s initiation in 2023.

IMF Managing Director Kristalina Georgieva welcomed the announcement, stating that the agreement “paves the way for IMF Executive Board consideration” of the first review of Ghana’s program. She acknowledged the efforts of the Official Creditor Committee, especially co-chairs China and France, in reaching the comprehensive debt treatment agreement under the G20 Common Framework.

The G20 Common Framework has also seen debt relief requests from Chad, Ethiopia, and Zambia. While progress in talks has been hindered by coordination issues and disagreements over assessing the comparability of treatment between various types of creditors, the debt treatment agreement with official creditors stands as a substantial milestone for the initiative.

Ghana had initially submitted “working proposals” for debt restructuring to the official creditor committee in June 2023. This move followed the country’s exclusion from international capital markets and challenges, including a surge in inflation leading up to its default. In September 2023, the Ghanaian government filed for bankruptcy after struggling to meet debt repayment obligations, aligning with the circumstances faced by two other African countries.