Ghana’s Bondholder Agreement Soon Assures IMF Official
According to an IMF official, Ghana’s efforts to reach a restructuring agreement with holders of its international bonds are seen as a matter of time rather than insurmountable obstacles. Abebe Selassie, director of the African Department at the IMF, expressed confidence that negotiations would progress in the coming weeks, depending on the government’s commitment and intensity.
The cocoa-, gold-, and oil-producing country sought financial support from the IMF in 2022 after defaulting on most of its $30 billion external debt due to escalating debt costs and spiraling inflation. While Ghana has not yet finalized a Memorandum of Understanding (MoU) with its official bilateral creditors—a crucial step for unlocking additional IMF funding—Selassie remains optimistic about the timeline for reaching an agreement.
“We are confident that it’ll happen in the next few weeks,” stated Stephane Roudet, IMF Mission Chief for Ghana, emphasizing the progress made in negotiations and drafting. Roudet also noted that economic growth has exceeded expectations, prompting a revision of growth projections for 2024.
Despite recent challenges, including Ghana’s inability to reach a viable restructuring agreement with bondholders, discussions are ongoing to align with the IMF’s debt sustainability targets. While some details of the negotiations may have initially breached the fund’s analysis, there is confidence that subsequent discussions will yield more favorable outcomes.
The IMF emphasized that a new staff-level agreement for the second review of Ghana’s $3 billion loan program would unlock a $360 million tranche once an MoU with official bilateral creditors is finalized. Selassie clarified that while progress with bondholders is encouraged, it is not a prerequisite for IMF board approval of the following loan disbursement.
Navigating debt restructurings is complex, especially with a diverse mix of creditors, but Selassie noted that progress in Ghana has been relatively swift by historical standards. However, there is a collective desire to expedite the process and reach agreements promptly to ensure the country’s financial stability and economic recovery.
