IMF board to approve US$600 million for Ghana on 19 January

The government has commended bilateral creditors for reaching an agreement with Ghana to restructure US$2.5 billion in loans, allowing the IMF to sign off on the next stage of its Ghana programme

The executive board of the International Monetary Fund (IMF) is expected to approve the second tranche of its US$3 billion credit facility to Ghana on 19 January 2023.

This follows Ghana’s success in securing a debt treatment from its official creditors, which has led to the restructuring of US$2.5 billion out of a total exposure of US$5.1 billion owed bilateral and commercial creditors.

The Official Creditor Committee (OCC), co-chaired by China and France, presented a draft term sheet to the Government of Ghana and the International Monetary Fund on 12 January 2024.

This will lead to a memorandum of understanding and then clearance to the management of IMF to go to the board to seek approval to release the second tranche of the facility (US$600 million) to Ghana.

Speaking to Asaase Radio’s Nana Oye Ankrah in an exclusive interview, Finance Minister Ken Ofori-Atta expressed optimism that the board’s decision will be positive because of the level of fiscal discipline shown by Ghana.

“Yesterday was quite historic. We did receive the draft term sheet from the OCC, which means in effect that the co-chairs, France and China, working with members of the Official Creditor Committee, had come to a broad agreement on the way forward,” the Finance Minister said. “That really signalled to the Fund that they can proceed to have the board meeting, which will lead to the release of the US$600 million which we negotiated with the Fund.”

Asked about the OCC’s terms for debt restructuring, the minister did not give details but said they were favourable.

“For the terms, we would finally have to sit with the OCC to agree on a memorandum of understanding. But we have already sent them a notification that we are in broad agreement with the terms that they have sent to us,” Ofori-Atta said.

Ghana’s cutoff date for restructuring the US$2.5 billion under consideration has also been extended from March 2022 to December 2022, which gives the country more financial room to manoeuvre.

Ghana’s attempt to get a deal from Paris Club members and bilateral creditors has dragged on for months. The delay, analysts say, was largely due to the low level of co-operation from China and France, which presented new conditions.

But Ofori-Atta explained that in relation to “conditions with regard to getting the assurance that there was comparability of treatment with the various loans that have been given to Ghana, I think that that technical exercise went in some way”.

The IMF welcomed Ghana’s debt treatment agreement with its external creditors. The IMF managing director, Kristalina Georgieva, took to her X handle to express her delight.

“Great news on 🇬🇭 Ghana reaching an agreement with its official bilateral creditors on a debt treatment. This clears the path for our board to consider Ghana’s first program review and continue providing much-needed support.”

Reporting by Nana Oye Ankrah

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