According to an IMF official, the IMF is hopeful that Ghana will strike a debt restructuring agreement with bilateral creditors within six to eight weeks as the West African nation struggles to recover from an economic crisis.
An agreement to restructure $5.4 billion in debt owed to China and other Paris Club creditors would allow for the second delivery of a $3 billion IMF rescue loan.
Abebe Selassie, director of the IMF’s Africa section, expressed the hope that the fund’s Executive Board would be able to consider the payment before the year was through.
In an interview with Reuters on the sidelines of the IMF and World Bank Annual Meetings in Marrakech, Morocco, Selassie said: “Bilateral official debt is significant, but not the lion’s share of the debt challenge of Ghana.”
“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.”
When asked how soon creditors should agree to allow the IMF to approve the next loan tranche, Selassie responded, “Hopefully in the next six to eight weeks.” On that compensation, the personnel level agreement was achieved last week.
Ghana, a country that produces gold, cocoa, and oil, is negotiating to restructure its obligations with bilateral and commercial creditors amid the greatest economic crisis in a generation. Ghana cannot access foreign financial markets because of the spiraling costs of its domestic debt.
According to a government presentation to investors, it plans to restructure $20 billion of the country’s total external debt, which was over $30 billion by the end of 2022.
To properly implement the $3 billion loan agreement from the IMF, Ghana plans to reduce interest payments on its foreign debt by almost $10.5 billion over the next three years.
Through the Common Framework, a procedure for debt restructuring developed countries through the Group of 20 leading economies in response to the coronavirus epidemic, is reorganizing its foreign obligations.
China has been accused of instigating delays, which it disputes, and the process has come under fire for being drawn out. “There’s been some learning on the Chinese side because they’re new creditors,” Selassie stated. “Hopefully, in the future… we’ll be getting much more rapid response from all official creditors.”
