IMF hopes Ghana will reach debt deal in six to eight weeks

Ghana is in talks with bilateral and commercial creditors to restructure its debts amid its economic crisis

 The International Monetary Fund (IMF) hopes that Ghana will reach a debt restructuring agreement with bilateral creditors within six to eight weeks, IMF Africa department director Abebe Selassie has said.

An agreement to rework US$5.4 billion of debt to China and members of the Paris Club of creditor nations would pave the way for a second disbursement from a US$3 billion International Monetary Fund rescue loan.

Abebe Selassie said he hoped the fund’s executive board would be able to consider approving the payment before the end of the year.

“Bilateral official debt is significant, but not the lion’s share of the debt challenge of Ghana,” Selassie told Reuters in an interview on the sidelines of the IMF and World Bank Annual Meetings in Marrakech, Morocco.

“Within this stock of obligations that Ghana has to bilateral creditors, the share to the Paris Club is fairly large So we’re hoping that there will be a quick meeting of minds.”

Asked about the timeframe for creditors to reach a deal enabling the IMF to approve the next loan tranche, Selassie said: “Hopefully in the next six to eight weeks.”

The staff level agreement on that payout was reached last week.

Ghana is in talks with bilateral and commercial creditors to restructure its debts amid its worst economic crisis in a generation, having been locked out of international capital markets as it struggles with spiralling domestic debt costs.

It is aiming to restructure US$20 billion out of total external debt that was about US$30 billion at the end of 2022, according to a government presentation to investors.

Ghana aims to cut around US$10.5 billion from external debt interest payments over the next three years to successfully implement the US$3 billion loan deal from the IMF.

It is restructuring its external debts through the Common Framework, a debt rework process set up by the Group of 20 leading economies for developing nations in response to the coronavirus pandemic.

The process has been criticised for delays, with China being accused of causing hold-ups – something it denies.

“There’s been some learning on the Chinese side, because they’re new creditors,” Selassie said. “Hopefully going forward… we’ll be getting much more rapid response from all official creditors.”

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