Speaking at the signing ceremony, the Minister for Finance, Dr. Cassiel Ato Forson, recalled the difficult period Ghana endured during the crisis, which forced the government at the time to declare a debt default.

He noted that the country is now witnessing a significant economic turnaround as reforms and fiscal consolidation measures begin to take effect.

“Ghana went through a very difficult period in 2022–2023. It was a financial crisis and the government of the day had to declare a default,” the minister said. “Today we are recovering and seeing a significant turnaround, and we are putting systems in place to ensure we do not return to that situation again.”

Dr. Forson explained that Ghana is nearing the completion of its external debt restructuring programme, adding that the agreement with Belgium marks another important milestone.

According to him, Belgium is the eighth Official Creditor Committee (OCC) country with which Ghana has concluded a bilateral debt restructuring agreement.

Dr. Forson also expressed gratitude to the Government and people of Belgium for their cooperation and support throughout the restructuring process.

Belgium’s Ambassador to Ghana, Carole van Eyll, reaffirmed her country’s commitment to supporting Ghana as it navigates the aftermath of the economic crisis.

She said Belgium was pleased to have concluded the restructuring agreement and commended Ghana’s efforts to restore macroeconomic stability.

“We are happy to continue supporting Ghana, and we are pleased that this restructuring has been concluded,” Ambassador van Eyll said.

She added that Belgium looks forward to strengthening cooperation with Ghana in the years ahead as the country continues on its path of economic recovery.

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Speaking at the AU-EU High-Level Seminar in Brussels on Thursday, October 2, 2025, ahead of the AU-EU Summit, he admitted that while the framework offered temporary economic relief, it came with severe social and human costs.

“I witnessed the suffocating grip of debt on our economy and our citizens. This deeply troubled me and still does,” he told African and European leaders.

Ghana joined the Common Framework in 2023, restructuring $13 billion in Eurobonds and securing $10.5 billion in external debt service relief through 2026.

The deal lowered the debt-to-GDP ratio from the mid-80s to 70.5 percent, restoring some investor confidence and helping anchor an IMF-backed programme.

Despite these gains, Akufo-Addo said the prolonged and sequential process created uncertainty, weakened public trust, and left ordinary Ghanaians suffering. He pointed to pensioners, youth, and small investors as some of the hardest hit.

“The most painful part was the impact on ordinary people. Their lives and livelihoods were shattered,” he said.

Turning to Africa’s broader debt challenges, the former president stressed that the continent’s $1 trillion burden reflects a global system “not built to free us, but to bind us.” More than 30 African countries, he noted, now spend more on interest payments than on healthcare.

“Every dollar diverted to creditors is a dollar taken from a hospital, from a child’s vaccination, from a community’s future. This is not economics, it is inequity,” he argued.

Akufo-Addo renewed his call for bold reforms, including immediate debt service suspension, comprehensive restructuring, and concessional financing.

He emphasised that debt relief should not be seen as charity: “Debt relief for Africa is not an act of generosity. It is an act of justice.”

He further proposed linking debt cancellation to climate resilience through a “Debt Relief for Green Investment and Resilience” framework, noting Africa’s vulnerability to climate shocks despite contributing less than 4% of global emissions.

“To our European partners, I say this: hear the voice of your neighbouring continent. Stand with the AU and South Africa’s G20 Presidency to advance ambitious reform of the Common Framework,” he appealed.

While acknowledging the responsibility of African nations to diversify their economies and strengthen governance, he warned that without reforms to global finance, local efforts would continue to be undermined by “predatory lending and punitive trade terms.”

“The sacrifices we make today, the compromises, and the collaborations we engage in today can only inure to the benefit of our world. When Africa rises free from the weight of debt, the whole world rises with it,” he added.

In a post on his social media handles, Dr. Ato Forson disclosed that the mission involved meetings with China’s Ministry of Finance, China Exim Bank, and key financial and contractor creditors.

He noted that the discussions were constructive and represent significant progress toward finalising the debt restructuring process.

The Finance Minister described the engagements as a critical step in the government’s broader efforts to stabilise the economy, address the country’s debt challenges, and protect the wellbeing of citizens.

He indicated that the progress made in China strengthens Ghana’s position as it works to conclude this difficult chapter in the country’s economic history and move toward a more resilient, inclusive, and stable future.

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He emphasized the importance of strengthening the debt sustainability framework to proactively prevent unsustainable debt accumulation without unduly limiting access to much-needed development assistance.

Speaking on behalf of African Governors at the 2025 African Consultative Meeting during the ongoing IMF/World Bank Spring meetings in Washington, DC, Dr. Asiama said refining the IMF’s debt sustainability toolkit is critical in this regard.

He added, “We urge the IMF to enhance its risk assessment tools and early warning systems to timely identify potential debt sustainability issues. We expect the ongoing review of LIC DSA to take stock of shortcomings and address them.”

He also urged the IMF to continue leading debt restructuring and debt relief efforts.

“While we appreciate the work of the Global Sovereign Debt Roundtable (GSDR) and G20 Common Framework, the ongoing high debt vulnerabilities in developing countries, especially in Africa, call for a more comprehensive debt relief strategy. Streamlining processes, enhancing debt transparency and reporting, and incentivizing private creditor participation in the Common Framework are crucial for fostering confidence and encouraging early engagement from members,” he pointed out.

Additionally, Dr. Asiama noted that Multilateral Development Banks’ significant exposure to debt-vulnerable countries necessitates deeper discussions on fairer debt treatment across different creditors and additional financing support.

He called on the IMF to use its convening powers to drive this dialogue at the GSDR.

Dr. Asiama concluded by stressing the importance of enhancing policy coordination among international financial institutions (IFIs), urging the IMF, other IFIs, and regional bodies to better coordinate and align their financial and technical support to developing countries, considering their diverse needs and capacities.

“Promoting regional cooperation to address common challenges and capitalize on collective strengths is paramount. Given the debt vulnerabilities exacerbated by climate change, we call for enhanced collaborative efforts. This includes proposing ambitious yet achievable and monitorable concessional financing options, establishing joint financing mechanisms, and developing common policy frameworks,” he said.

Half of SSA at High Risk or Already in Debt Distress

Meanwhile, Dr. Asiama noted that half of Sub-Saharan African countries are at high risk of, or already in debt distress by the end of 2024. This severely constrains fiscal space for essential social and development spending, and hinders progress towards achieving the SDGs.

He expressed particular concern about the per capita public expenditure on interest payments in Africa, which has surpassed spending on health and education, exacerbated by declining overseas development assistance.

However, he stated that African Governors are committed to proactive debt management, enhancing revenue mobilization, and rationalizing expenditures to restore fiscal and debt sustainability while implementing policies to promote durable economic growth.

But these efforts require stepped-up international cooperation and support from development partners, including the IMF.

The theme for the occasion was “Debt Vulnerabilities in Developing Countries—a Key Challenge for Achieving the Sustainable Development Goals (SDGs).”

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After successfully restructuring domestic debt last year and reaching agreement on a Memorandum of Understanding with Ghana’s Official Creditors Committee (OCC) under the G20 Common Framework in June, the government has announced the successful completion of the consent solicitation to restructure its Eurobonds, with the exchange planned to take place in the coming weeks.

According to the International Monetary Fund, the government is committed to pursuing good-faith efforts to reach an agreement with other commercial external creditors on a debt treatment consistent with program parameters and the comparability of treatment principles.

“The external sector has seen considerable improvement in 2024, driven by strong exports—particularly gold and to a lesser extent oil—and higher remittances with international reserves accumulating beyond program targets. Financial stability has been maintained, with progress on recapitalization and increased bank profitability”, it pointed out.

The IMF staff met with Finance Minister, Dr. Mohammed Amin Adam; Bank of Ghana Governor, Dr. Ernest Addison, and their teams, as well as representatives from various government agencies.

The IMF team also engaged with other stakeholders.

It expressed its gratitude to the Ghanaian authorities and other counterparts for their continued open and constructive engagement.

Meanwhile, a significant number of bondholders who participated in the Eurobond Debt Exchange Programme opted for the disco menu of new notes.

Investors will therefore take 37.0% haircut and receive interest payments of 5.0% from 2024 to July 2028, and 6 percent interest subsequently.

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This response follows recent publications alleging that the government is engaged in restructuring debts with these entities.

In a statement released on Monday, the MoF clarified, “The Ministry categorically denies any such restructuring being considered, either during or after the domestic debt restructuring program, which began in December 2022 and concluded in October 2023.”

The Ministry explained that during the Monthly Press Briefing on the Economy held on August 29, 2024, a question about external commercial debt restructuring was misinterpreted, leading to reports that obligations to local contractors would be restructured.

“To clarify, debt restructuring pertains to reorganizing Ghana’s debt portfolio, which consists of loans and bonds. Liabilities to domestic contractors are payment claims, not loans or bonds, and therefore are not subject to restructuring,” the statement emphasized.

The MoF also noted that it has never engaged contractors in debt restructuring discussions, a fact confirmed by contractors in a recent interview with JoyNews.

“The Domestic Debt Exchange Programme (DDEP) covered only domestic bonds held by the Central Bank, Pension Funds, and retail debt investors, and did not include payments to contractors.

“Following the DDEP, the Ministry has made significant strides in external debt restructuring, including finalizing an MOU with the Official Creditor Committee under the G20 Common Framework, launching the Consent and Exchange Solicitation process for Eurobond debt, and engaging with external commercial creditors to reach a resolution soon,” the statement concluded.

Source: Adomonline

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After successfully negotiating a deal with its bilateral and Eurobond holders, the government has now turned its attention to private banks and suppliers.

The negotiations with these creditors who form part of the country’s commercial creditors are aimed at providing some debt relief to the country.

Responding to a question from the Graphic Business at its monthly economic update, Minister of Finance Dr Mohammed Amin Adam said the government has sent an offer through its advisors.

He said the government has also engaged physically with these creditors in Ghana and China.

“We visited China and we engaged some of them. We have also engaged some here in Ghana and we have shared our offer with them for their consideration.”

“Hopefully, they will accept the terms that we are offering to them,” he stated.

Eurobond holders

This comes weeks after the government’s deal with Eurobond holders to restructure a $13 billion debt.

The deal with holders is expected to lead to a debt cancellation of $4.7 billion and debt service relief of $4.4 billion between 2023 and 2026.

It also comes months after the government formalised its agreement with bilateral creditors to restructure its $5.1 billion debt. This deal is also expected to result in a debt service relief of $2.8 billion between 2023 to 2026.

The government has also concluded negotiations with five of the seven Independent Power Producers, which will lead to a saving of some $6.6 billion over the lifetime of the Purchasing Power Agreements (PPAs).

Dr Amin Adam said the government would in the coming days launch the exchange offer for its Eurobonds.

He said the exchange offer, which would be opened for 21 days, reflected the terms agreed in principle with bondholders on 24th June including important concessions from bondholders, ensuring a fair burden sharing between domestic, official and commercial external creditors.

“We count on the full support of our bondholder community, both abroad and in Ghana, to reach high participation levels.”

“We expect that all of our outstanding bonds will be exchanged for our new bonds where investors can choose between two options: a PAR option – with no nominal haircut but low interest rates, and a Disco option with a 37% nominal haircut but higher interest rates,” he stated.

Strategic infrastructure

The minister said the government had taken steps to ensure the completion of strategic infrastructure that has been impacted by the debt operations.

“Our efforts have enabled us to complete the Prempeh (I) International Airport, Afari Military Hospital in Kumasi as well as the Yakubu Tali International Airport in Tamale.”

“This week, the President cut sod for the Accra-Tema Motorway redevelopment project. Two (2) days ago, I also visited the Kasoa-Winneba Road, which is being fully funded from the national budget,” he mentioned.

He said the government was also working with its partners to implement the Economic Roads Improvement Programme, which includes the Accra-Kumasi Road.

He said that was part of a broader strategy to open up the country for trade, tourism and regional integration.

Third review

The minister also announced that the government was currently preparing for the third review of the IMF-supported Programme after successfully concluding the second review of the programme on June 28, 2024.

For the third review, the IMF has programmed a staff mission for the period September 24 to October 4, 2024, to, among others, assess the performance of the country about the performance targets agreed with the fund under the programme.

The review will assess the six Quantitative Performance Criteria (QPCs), four Indicative Targets (ITs), and a number of
Structural Benchmarks (SBs) are due by the end of June 2024.

Dr Amin Adam said preliminary data for the first half of 2024 indicated that the counter was on track to meeting the targets for the 3rd Review.

It is expected that the IMF Executive Board will consider Ghana’s 3rd Review for approval by the end of December 2024, which will enable the Board to immediately disburse the 4th Tranche of US$360 million, bringing the total disbursements to US$1.92 billion.

World Bank support

The government is currently in a US$900 million Development Policy Operation (DPO) Programme with the World Bank for a period 3 years to support the budget and the implementation of key reforms aimed at restoring fiscal and debt sustainability, supporting financial sector stability and private sector development, improving energy sector operational and financial performance, and fostering resilience to shocks and climate change.

Dr Amin Adam said following the achievement of the first set of reform actions, the first tranche of financing under the DPO amounting to US$300 million was disbursed by the World Bank in March 2024 to support the budget.

“Government is currently implementing the second set of reform actions that will result in the disbursement of the second tranche of the funding under the DPO series.”

“Significant progress has been made by all implementing MDAs towards the achievement of the reform actions. Five out of the 10 actions under DPO2 have been achieved, with the remaining at various advanced stages of completion,” he said.

He said there were, however, four legislations pending Parliamentary approval that were critical to the approval and disbursement of the second tranche of the DPO series.

These are the Social Protection Bill, the Environmental Protection Authority Bill, the Amendment to the GIPC Act (Act, 865, 2013), and the LI on Independent power purchase.

“We are working with Parliament with the expectation that all these outstanding legislation will be passed by the House during the recall to help fast-track the achievement of all actions necessary for the disbursement of the next tranche of US$300 million,” he said.

Source: Graphic Business

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This recommendation comes from ISSER’s 2024 Mid-Year Budget Review, titled “A Critical Assessment of the 2024 Mid-Year Budget by ISSER.”

The review highlights the alarming increase in Ghana’s debt stock.

By the end of June 2024, the provisional total central government debt stood at GH¢742.0 billion (US$50.9 billion), equivalent to 70.6 per cent of GDP, up from GH¢608.4 billion at the end of December 2023.

This increase of 22.0 per cent is attributed mainly to continued exchange rate depreciation since 2022.

The debt comprises GH¢452.0 billion in external debt and GH¢290.0 billion in domestic debt, representing 60.9 per cent and 39.1 per cent of the total debt stock, respectively.

To address this growing debt burden, ISSER recommends several fiscal measures, with a particular focus on building up the existing Sinking Fund.

The review states, “Build up the existing Sinking Fund to ensure sufficient for repaying restructured domestic and international debts when they fall due.”

This measure is aimed at ensuring that the government has adequate resources to meet its debt obligations and avoid default.

Additionally, ISSER underscores the need for the government to support banks and other private-sector corporate institutions adversely affected by the Domestic Debt Exchange Programme (DDEP).

“The government should fulfil its promise to support banks and other private sector corporate institutions adversely affected by the DDEP to minimize its costs,” the review advises.

ISSER also recommends engaging with bilateral and multilateral institutions to access cheaper funds, reducing reliance on expensive capital market funds.

The review suggests establishing guidelines to clearly state the optimal proportions or ceiling on each type of debt.

“The government should engage with bilateral and multilateral institutions to access cheaper funds while reducing reliance on expensive capital market funds. Guidelines should be established to clearly state the optimal proportions or ceiling on each type of debt,” the

The Institute of Statistical, Social and Economic Research (ISSER) has emphasized the importance of reinforcing Ghana’s Sinking Fund to adequately manage the repayment of restructured domestic and international debts.

This recommendation comes from ISSER’s 2024 Mid-Year Budget Review, titled “A Critical Assessment of the 2024 Mid-Year Budget by ISSER.”

The review highlights the alarming increase in Ghana’s debt stock.

By the end of June 2024, the provisional total central government debt stood at GH¢742.0 billion (US$50.9 billion), equivalent to 70.6 per cent of GDP, up from GH¢608.4 billion at the end of December 2023.

This increase of 22.0 per cent is attributed mainly to continued exchange rate depreciation since 2022.

The debt comprises GH¢452.0 billion in external debt and GH¢290.0 billion in domestic debt, representing 60.9 per cent and 39.1 per cent of the total debt stock, respectively.

To address this growing debt burden, ISSER recommends several fiscal measures, with a particular focus on building up the existing Sinking Fund.

The review states, “Build up the existing Sinking Fund to ensure sufficient for repaying restructured domestic and international debts when they fall due.”

This measure is aimed at ensuring that the government has adequate resources to meet its debt obligations and avoid default.

Additionally, ISSER underscores the need for the government to support banks and other private-sector corporate institutions adversely affected by the Domestic Debt Exchange Programme (DDEP).

“The government should fulfil its promise to support banks and other private sector corporate institutions adversely affected by the DDEP to minimize its costs,” the review advises.

ISSER also recommends engaging with bilateral and multilateral institutions to access cheaper funds, reducing reliance on expensive capital market funds.

The review suggests establishing guidelines to clearly state the optimal proportions or ceiling on each type of debt.

“The government should engage with bilateral and multilateral institutions to access cheaper funds while reducing reliance on expensive capital market funds. Guidelines should be established to clearly state the optimal proportions or ceiling on each type of debt,” the review states.

Moreover, ISSER calls for a review of the fiscal responsibility law to include legislation of a debt ceiling to ensure deficits and debt are contained within sustainable thresholds.

“Review the fiscal responsibility law to include legislation of a debt ceiling to ensure deficits and debt are contained within sustainable thresholds,” the review recommends.

These recommendations aim to enhance Ghana’s fiscal discipline and ensure the country’s debt remains within manageable limits.

By building up the Sinking Fund and implementing these fiscal measures, ISSER believes Ghana can improve its financial stability and maintain investor confidence.

Source: Raymond Acquah

He believes the indicators so far point to the fact that the economy may see a boost in the country’s potential to attract investors, which it had previously fallen out of favor with.

“We saw the numbers that came through from the statistical service, we’re still talking 4% quarter-on-quarter growth in real terms, we’ve also seen just yesternight the IMF announcement of the completion of the second review which is largely good and we’ve even announced some deal with independent power producers to restructure their debts,” he said on Saturday.

Speaking on Newsfile, the economist indicated that “this will unlock more financial resources for the country through interest and the principal write-offs that we’re getting and the deferred repayments, but also the additional multinational financing that would come through for us as a country”

This comes after the Finance Minister, Dr Mohammed Amin Adam announced the completion of Ghana’s debt restructuring programme with its official creditors.

According to the Member of Parliament for Karaga, the government has successfully restructured its debt of 5.1 billion dollars with these creditors, in addition to concluding the restructuring of 13.1 billion dollars with Eurobond holders.

“Last two weeks, we concluded negotiations with the official creditors, and we have agreed to restructure 5.1 billion dollars. I am telling you that the government is good in negotiations and of this amount, we are going to make savings of $2 billion.”

“As I speak to you, tomorrow morning, there will be an announcement that we have also concluded our negotiations with the Eurobond Holders of $13.1 billion, and ladies and gentlemen, when we announce it, please read the details. We have negotiated a good deal for Ghana and that is $8 billion,” he said.

“Ideally, government should not be held responsible for the investment decisions of individuals, but this government is so carin

“Mistakes were made and people were not well-informed, and they didn’t know who to consult to be advised, but we also know that the people who are affected are suffering, and we have heard that some people have died and others had to commit suicide.”

“This government is so caring that in the first place, we granted some bailout to all the affected and I want to tell you again that the President has directed that we do another bailout. So between now and October, we will release ¢1.5 billion to the affected people.”

The government recently secured delayed payment on interests and postponement on the maturity date in a restructured debt deal with bilateral creditors.

To meet its IMF target, the $77 billion economy needs to reduce debt to 55% of gross domestic product by 2028, compared with a burden of 109% projected for the year before Ghana began restructuring.

Dr Acheampong however hinted that “it may take a little bit longer for us to actually see that dramatically affect us within the timelines that the Finance Minister is talking about.”

“So I’m a little bit skeptical in terms of the bullish sentiment that the Finance minister expresses, but definitely the indicators have begun to turn in the right direction.”

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Speaking to Evans Mensah on Joy News’ PM Express, Thompson expressed scepticism about the effectiveness of debt forgiveness, suggesting that it merely postpones Ghana’s economic challenges rather than resolving them.

“I have been speaking about the Ghanaian economy since 2014, and I can assure you, as night follows day, that this $300 million from the IMF is merely covering the cracks; nothing will change,” he said on Tuesday.

He added, “As Ghanaians, we need to start preparing for a rough next ten years. We talk about savings, but when has the government ever met its revenue targets?

“And do you think international creditors are so naive that they won’t take the money if it’s available? Why would they give us a free pass? These are commercial creditors.”

Finance Minister Dr Mohammed Amin Adam recently announced the completion of Ghana’s debt restructuring program with its official creditors.

According to the Karaga MP, the government has successfully restructured $5.1 billion in debt with these creditors and concluded the restructuring of $13.1 billion with Eurobond holders.

Addressing attendees at a UK Town Hall meeting, Dr Amin Adam highlighted that these efforts have resulted in $8 billion in savings for the country.

“Two weeks ago, we concluded negotiations with the official creditors and agreed to restructure $5.1 billion. The government has negotiated well, and we are going to save $2 billion from this amount.

“As I speak to you, tomorrow morning, there will be an announcement that we have also concluded our negotiations with the Eurobond holders for $13.1 billion.

“Ladies and gentlemen, when we announce it, please read the details. We have negotiated a good deal for Ghana, resulting in $8 billion in savings,” he said.

However, Mr. Thompson remains unconvinced that the situation will improve for Ghanaians.

“There is nothing that will make me even consider for 1% that anything is going to change.

“The situation with the local currency is not going to change. All that’s going to happen is that as soon as the money comes in, the currency will stabilize temporarily,” he stated.

He predicts that after the December elections, the Ghanaian cedi will once again decline sharply against major international currencies.

“If we couldn’t solve our problems with over $10 billion in six years, how are we going to solve them with three billion?” he questioned.

“Let’s be real. I’ve heard economists talk endlessly, and after the fact, they come and explain what happened. I can assure you that’s what will happen again. When has the government ever met its revenue targets? There’s what you plan on paper and then there’s reality,” he said.

He emphasised that Ghanaians should prepare for the worst as the coming years will be very challenging.

“Let’s acknowledge that the next ten years will be very rough. The government will have very little money to work with, and we are also cut off from international capital markets,” he stated.

Thompson advised government to “find ways to cut expenditure and increase income.”

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This is the view of some international investors and Eurobond holders after government reached a deal on restructuring about $13.1 billion.

Ghana has over the past two years been prevented from going onto the international market to raise dollars from investors, due to rising debt levels, slow economic growth and low balance of payment account.

Government was shut out of that market after; it announced that it is working to restructure debts owed commercial creditors.

The Eurobond holders have also disclosed that, government is now undertaking some measures which will protect investors’ funds. It is expected that the conclusion of the debt restructuring will restore some market confidence.

Other financial observers have however warned that it will not be prudent for government to immediately rush to the capital market to raise funds in dollars considering the country’s debt levels.

This, they argue could have a negative impact on the economy since Ghana was first of all forced to go to the International Monetary Fund (IMF) for bailout due to over borrowing.

End of debt restructuring

Eurobond holders are expected to forego about $4.7 billion owed them by the Government of Ghana.

This is part of agreement reached with the Bondholders in restructuring a $13.1 billion debt.

The term sheet covering the Eurobond deal, showed that the Bondholders will also provide a cash flow of $4.4 billon, during the period under the International Monetary Fund (IMF) programme.

The concessions are needed, according to the new deal to restore debt sustainability under the Fund Programme.

Government is also proposing two options, under the deal.

This is the P.A.R and Disco Option. According to the agreement, investors who take the Disco option will receive three new bond instruments.

However the P.A.R option will have up to 1.6 Billion cedis CAP.

According to the Member of Parliament for Karaga, the government has successfully restructured its debt of 5.1 billion dollars with these creditors, in addition to concluding the restructuring of 13.1 billion dollars with Eurobond holders.

Addressing attendees at a UK Town Hall meeting, Dr. Amin Adam highlighted that these efforts have resulted in savings of 8 billion dollars for the country.

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“Last two weeks, we concluded negotiations with the official creditors, and we have agreed to restructure 5.1 billion dollars, I am telling you that the government is good in negotiations and of this amount, we are going to make savings of $2 billion.”

“As I speak to you, tomorrow morning, there will be an announcement that we have also concluded our negotiations with the Eurobond Holders of $3.1 billion and ladies and gentlemen when we announce it, please read the details. We have negotiated a good deal for Ghana and that is $8 billion,” he said.

“Ideally, government should not be held responsible for the investment decisions of individuals, but this government is so caring.

“Mistakes were made and people were not well-informed, and they didn’t know who to consult to be advised, but we also know that the people who are affected are suffering, and we have heard that some people have died and others had to commit suicide.”

“This government is so caring that in the first place, we granted some bailout to all the affected and I want to tell you again that the President has directed that we do another bailout. So between now and October, we will release ¢1.5 billion to the affected people.”

The government recently secured delayed payment on interest and postponement on the maturity date in a restructured debt deal with bilateral creditors.

To meet its IMF target, the $77 billion economy needs to reduce debt to 55% of gross domestic product by 2028, compared with a burden of 109% projected for the year before Ghana began restructuring.

The current bondholder agreement would leave debt slightly above that target.

Ghana’s economy fared better than the IMF expected, expanding 2.9% in 2023 compared to an initial IMF target of 1.5%. That means a revised DSA would accommodate the agreement with bondholders, Adam said.

Ghana began working to revamp its debt a little over a year ago as part of a deal with the International Monetary Fund, reaching an agreement in principle with bilateral creditors in January to rework $5.4 billion of obligations under the Group of 20 Common Framework for Debt Treatment.

That agreement set the tone for the restructuring of Eurobond debt.

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The deal will see bondholders take a haircut on principal of up to 37% and maturity of the bonds lengthened, two of the sources said.

Ghana defaulted on most of its $30 billion in external debt in 2022, under the strain of the COVID-19 pandemic, the war in Ukraine and higher global interest rates and surging debt.

Like Zambia, Ghana also signed up for debt treatment under the G20 Common Framework, a process designed to facilitate quick debt overhauls and to bring the newest large bilateral lender, China, into the process.

Zambia’s bondholders signed off on its restructuring earlier this month after the southern African copper producer became the first African country to default during the pandemic.

For Ghana, “things are pretty close. We can expect an announcement by next week,” one source said, asking not to be named because they were not authorised to speak to media.

The other two sources said the announcement could come as soon as Friday.

Ghana’s finance ministry and the Paris Club, an alliance of creditor nations, could not immediately be reached for comment due to the late hour.

Ghana started formal talks with two groups of bondholders in mid-March – a group of Western asset managers and hedge funds and another one including regional African banks.

The negotiations, however, stalled in April after the proposed deal failed to meet the International Monetary Fund’s (IMF) debt sustainability analysis requirements, forcing both sides to regroup to find a suitable solution.

The three sources said the deal had since fit into a revised IMF debt framework on Ghana shared with bondholders earlier, resulting in the agreement in principle.

The world’s No.2 cocoa producer earlier this month agreed a pact with its official creditor committee to formalise a debt restructuring deal reached in January.

The outlines of the agreement paved the way for the IMF executive board to hold a June 28 meeting on Ghana to consider a second review of its $3 billion loan, three-year package and the release of the next tranche of $360 million.

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This development marks a significant milestone in Ghana’s efforts to stabilise its economy and address its mounting debt crisis.

‘Ghana is committed to addressing its debt challenges and stabilising the economy. The draft MoU is a significant step towards achieving sustainable debt levels,’ Finance Minister, Mohammed Amin Adam said.

Timeline of key events:

February 2022: Credit ratings agency Moody’s downgrades Ghana’s credit rating from B3 to Caa1, citing ‘very high credit risk.’ This follows a similar downgrade by Fitch in January.

March 2022: Ghana’s central bank raises interest rates by 250 basis points to 17 percent to combat rising inflation and a weakening currency.

April 2022: Parliament approves an ‘e-levy’ tax on electronic payments to increase revenue.

May 2022: Finance Minister Ken Ofori-Atta announces Ghana will manage its debt without IMF assistance.

July 2022: Amid public protests, Ghana requests an IMF loan to address economic hardships.

July 2022: Parliament approves a $750 million loan from the African Export Import Bank to avoid default.

August 2022: Another record interest rate hike by the central bank as inflation soars.

December 2022:

• Ghana launches a domestic debt exchange to manage spiralling debt payments.
• Reaches a staff-level agreement with the IMF on a $3 billion rescue package, conditional on debt restructuring.
• Announces default on most external debt.

January 2023: Ghana seeks debt restructuring under the G20’s Common Framework, involving China, India, and other non-Paris Club nations.

February 2023: Domestic debt exchange concludes with 85% bondholder participation. Bilateral creditors begin committee formation talks.

March 2023: Government and international bondholders commence debt restructuring negotiations.

May 2023: Official creditors form a restructuring committee co-chaired by China and France, providing IMF-required financing assurances for the $3bn rescue loan.

June 2023: Ghana proposes restructuring to official creditors, aiming to reduce $10.5 billion in interest payments over three years.

October 2023: Reaches staff-level agreement with the IMF on the first review of the loan programme. The finance ministry proposes a 30-40 percent haircut to bondholders.

January 2024: Ghana reaches a deal-in-principle to restructure $5.4bn of debt with official creditors leading to IMF approval of the next loan tranche.

February 2024: Mohammed Amin Adam replaces Ken Ofori-Atta as finance minister, pledging to maintain IMF programme adherence.

March 2024: Formal debt restructuring talks with international bondholders begin.

April 2024: Talks stall as Ghana rejects bondholder proposals.

May 2024: Ghana confirms receipt of the draft MoU from bilateral creditors, set to formalise the January agreement upon signing.

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This is what JOYBUSINESS has picked up from persons with knowledge of the debt restructuring negotiations with the bilateral creditors.

JOYBUSINESS understands that the document was sent on May 23, 2024, through the Official Creditor Committee to the government.

All the 22 member countries that make up the Official Creditor Committee have all at the individual level agreed to the proposed terms on restructuring the debt owed by Ghana.

What is next for the Government of Ghana?

The government is expected to go through the MoU and sign the agreement with the creditors.

The agreement could however delay if the government raises objections with some of the provisions.

Impact on Ghana’s programme with IMF and Board in June 

The development could go a long way to aid the IMF board in passing Ghana’s review under the programme. This will result in the disbursement of some $360 million to the country by June ending 2024.

The Director of the African Department of the IMF, Abebe Aemro Selassie in April 2024, revealed that it has secured the needed financing assurance from bilateral creditors that will help to conclude the second review for Ghana.

“To be clear, they have provided financing assurances though, and that remains in effect. And so, we are not envisaging that it will be an issue for our ability to conclude the next review and provide the disbursement that is pending”, Selassie said.

Background

Ghana in January 2024, secured “an agreement in principle” with the bilateral creditors under the G20 Common Framework debt treatment.

This helped the country in completing the first review under the IMF programme.

Ghana received $600 million in addition to some $300 million from the World Bank under the Development Policy Operation Financing.

This paved the way for the government to move on and work out the MoU between Ghana and its Official Creditor Committee on the terms for restructuring a 5-billion dollar debt.

Finance Minister, Dr Mohammed Amin Adam in April in Washington DC on the sidelines of the IMF Spring Meetings revealed that the bilateral creditors through the Official Creditor Committee have shared the draft document on Ghana’s debt restructuring with members for consideration.

“The Official Creditor Committee has shared the draft document with their members and as soon as they share the document with us and we are okay with that, then we have an agreement.”

IMF MD on Ghana’s Deal with Bilateral Creditors

The Managing Director of the IMF, Kristalina Georgieva, during a visit to Ghana later this year, revealed that the country was close to signing an MoU with the bilateral creditors on the restructuring of the debt.

“Ghana is in a good place now, because it has advanced negotiations with the bilateral creditors on restructuring of debts”.

“There are very tangible progress towards signing a Memorandum of Understanding with Bilateral creditors”, she added.

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That, Dr Mohammed Amin Adam, Finance Minister, said would be essential in solving the country’s energy sector financial challenges, which has been largely attributed to recent power outages across the country.

The Minister was speaking at a press briefing to wrap up Ghana’s activities at the just ended International Monetary Fund (IMF)/World Bank Group (WBG) Spring Meetings in Washington, US, monitored by the Ghana News Agency.

He noted that though the country did not have excess capacity, it had to pay for the debt accumulated in addition to the payment of legacy debt in the energy sector.

“As a result of these”, we have renegotiated with the IPPs to restructure the debt and once we complete the negotiations, the debt overhung, shortfall will reduce. I can tell you that in the next one month, we should be signing off with the IPPs on the restructuring of our debt,” he said.

Dr Amin Adam added that, “once the shortfalls are reduced, we should be working towards bringing the sector into financial sustainability in line with the Energy Sector Recovery Programme.”

Currently, Ghana has some US$1.9 billion energy sector financing gap to tackle, which the Minister during an earlier engagement at the spring meetings said had made the government take the “bullet” to solve.

“We assure investors that while there are challenges, we’re bold as a government to take the necessary bullet for us to put the sector in a more sustainable manner to address the challenges that investors are usually worried about,” he said.

The reforms include the implementation of the Energy Sector Recovery Programme, which started in 2019, and renegotiation of Independent Power Producers (IPPs) agreements to reduce the cost of generation.

There is also the implementation of a quarterly tariff adjustment review, which accounts for inflation, exchange rate depreciation, and changes in the generation mix, as well as a cash waterfall mechanism.

He disclosed the government’s plan to procure some one million revenue efficient meters through a partnership with the World Bank under a Programme-for-Result scheme to shore up revenue and support value chain operational effectiveness.

Meanwhile, the Institute for Energy Security (IES), has called on the Energy and Finance Ministries, to team up and urgently provide the money required to solve the current energy sector challenges to make Ghanaians enjoy reliable and affordable electricity.

The Institute also highlighted the importance of the government to resource the Electricity Company of Ghana (ECG) to bring down its technical and commercial losses.

Such support, Nana Amoasi VII, Executive Director, IES, recommended should go into the deployment of more smart meters, capable of detecting theft, in addition to having a more efficient distribution system to increase revenue.

Speaking to GNA last Tuesday, Nana Amoasi VII, noted that doing so would help in fulfilling ECG’s mission of providing quality, reliable and safe electricity services to support the economic growth and development.

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The Finance Minister added that this could lead to an agreement on the Memorandum of Understanding MOU being reached soon when this draft is shared and they are okay with it.

Dr Mohammed Amin Adam noted, “The Official Creditor Committee has shared the draft document with their members and as soon as they share the document with us and we are okay with that, then we have an agreement.”

The Finance Minister said this at the press conference in Washington DC USA on the sidelines of the IMF/World Bank Spring Meetings.

The Finance Minister added that “The IMF is not asking for a deal from the Bilateral Creditors before it goes to the board, but rather an agreement on the wording of the MOU and that will be sufficient for the IMF to go to its board.”

Dr Amin added, “We are very optimistic that we can meet all the conditions needed for IMF to go to the board in June this year.”

Negotiations with Eurobond holders and Commercial Creditors

On the negotiations with Eurobond and commercial creditors, the Minister of Finance noted that they have made good progress with these creditors and a deal will be reached soon.

He added, “Any deal that we reach with these commercial creditors should be in line with Ghana’s Debt Sustainability Analysis and we are working hard on that.”

The Minister noted that they are very optimistic that they will reach an agreement that will be in line with Ghana’s Debt Sustainability Analysis.

“We are working to narrow the gap when it comes to what we initially proposed to the creditors” the Finance minister revealed at the press conference.

The Finance Minister also added that “we have provided 33 per cent discount, coupon rate of 5 per cent, and we have 6 per cent following that, and if you subject this to the threshold, you are supposed to achieve 55 per cent

He said, “We need to work hard to ensure that the fresh negotiations fall in line with the debt sustainability analysis.”

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The country accounts for 7.0% of the share of Public and Publicly Guaranteed (PPG) external debt owed to China.

According to the World Bank, the lower exposure to multiple creditors has enabled Ghana and other debt-ravaged countries to reach or be close to reaching agreements with their external creditors.

“In January 2024, the Official Creditor Committee (OCC) reached an agreement in principle with the Government of Ghana on the terms of the treatment of official bilateral debt. Debt restructuring negotiations allowed the International Monetary Fund to conclude financing programmes and the World Bank to provide large positive net flows at highly concessional or grant terms”, it said.

The report continued that many low-income and lower-middle-income countries in Sub-Saharan Africa have accumulated debt burdens—as reflected by their high levels of public debt and increased debt service.

During the past decade, public debt increased rapidly, and the composition of PPG external debt shifted from bilateral creditors to private creditors and non–Paris Club governments.

Consequently, it said the larger share of debt owed to private creditors and non–Paris Club governments has not only complicated debt restructuring negotiations but also raised the debt service burden. High policy rates in advanced economies have also recently further increased interest payments on debts.

For instance, the shift in the composition of debt service from official to private creditors.

Again, interest payments owed by governments to private creditors account for almost 65% to 70% of total PPG external debt interest payments.

The Managing Director of the International Monetary Fund (IMF) Kristaline Georgieva revealed that “Ghana is in a good place now because it has advanced negotiations with the bilateral creditors on restructuring of debts.”

“There is very tangible progress made towards signing a Memorandum of Understanding with bilateral creditors” the Managing Director of the IMF added.

Madam Georgieva was responding to a question posed by JOYBUSINESS during a roundtable engagement with some journalists in Accra during this two-day working visit to Ghana.

She noted that reaching a deal with these creditors should provide space for the Government to spend on critical areas to help stabilize the economy.

Negotiating with private creditors

The IMF Managing Director also justified her push for Ghana to be tactful in their debt negotiations with Eurobond holders and private creditors. She is warning that Ghana’s three bailout packages may be in jeopardy if the country fails to secure a fair restructuring deal with Eurobond holders.

The Finance Ministry has had a tough time forcing through a domestic restructuring programme, which was widely criticised by all stakeholders. Hopes were high that the country would have smooth sailing after it secured creditor assurance from the official creditor committee, which includes China.

However, in a meeting with President Akufo-Addo during her official visit to Ghana, the IMF head said Ghana may suffer severe setbacks similar to the case in Zambia, where they have difficulties unlocking the full bailout package. Ghana currently needs to restructure a total of approximately $13 billion, which it owes to Eurobond holders.

“Ghana is indeed benefiting from the experiences of countries that have gone for debt restructuring under the common framework. The sooner we do a great deal the better for the country. To do a deal that may actually reverse progress is not going to be good for the country. You cannot allow the Eurobond creditors to twist your arm. Why? Because you have done a very painful domestic debt restructuring, you have agreed in principle on debt restructuring with the official creditors of Ghana under certain conditions. The deal with the Eurobond has to be a fair deal vis-a-visa what was already done otherwise we risk seeing what happened in Zambia,” she stated.

She said her meeting with President Akufo-Addo came at an opportune time that will be quite decisive for years to come, “because we are climbing a mountain and we are doing quite well, we are not yet at the top, we need to keep climbing so there’s radiation of responsibility we need to complete with private creditors but complete defending the interest of the country.”

Ghana’s Performance under the IMF Programme

Ghana has been able to meet almost all the key targets set under the programme, looking at indicators such as inflation rate and growth.

The IMF head noted that Ghana’s Programme with the Fund came in at the right time, and current developments have shown that Ghana took the right decision seeking support from the IMF to help stabilize the economy.

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According to the Managing Director, Kristalina Georgieva, the Fund is committed to helping advance the work on addressing debt vulnerabilities through the Global Sovereign Debt Roundtable so that “we better address issues like timeliness, predictability, and comparability of treatment”.

In a statement at the Conclusion of the first Meeting of the G20 Finance Ministers and Central Bank Governors, she said “On debt, as we heard from many, high debt service is a problem for a number of highly vulnerable countries, constraining resources that could go to development. I applaud the efforts that have been put in so far by G20 members to make the Common Framework deliver”. 

Global outlook risks and policy challenges persist

The IMF MD also said that the global outlook risks and policy challenges still persist.

Growth is projected this year at 3.1% versus 2.9% earlier projected. Inflation is down faster than expected.

“In our baseline, global headline inflation is expected to fall to 5.8% this year, and 4.4% next year. And this improved outlook also benefits developing economies that were cut off from markets for quite some time – such as Cote D’Ivoire, whose recent bond issuance was several times oversubscribed, followed by Benin and others”, she explained.

“This is encouraging, and yet we need to be conscious of three things”, she warned.

“First, the risks on the downside. One is more persistent inflation because of new price spikes that could result from geopolitical shocks and other supply disruptions – such as climate events – or from looser financial conditions, which could slow down the normalization of monetary policy. We can also have an upside risk, in which inflation falls even faster than expected. And that, of course, would be great for all of us”.

“Second, we should not be complacent because growth is still weak: 3% year after year, against an average of 3.8% in the pre-COVID decade. And even worse, in many places it is because of low productivity. Countries that are doing well, like the United States and some emerging market countries, have realized productivity gains”, she stressed.

“And third, we must be mindful that if interest rates are to remain higher for longer, financial sector risks could go up. So, they require careful monitoring. We must be vigilant for early signs of stress and systematically address vulnerabilities, especially in non-banking financial institutions”, she pointed out.

Central banks must finish job on inflation

For policymakers, Madam Georgieva said 2024 is shaping up to be a tricky year, advising central banks to finish the job on inflation by calibrating carefully whether they cut and how fast they cut, against the risk of being too slow and affecting growth negatively.

“Government authorities have to pursue fiscal consolidation to rebuild buffers and prepare for shocks that may still come. We advise medium-term fiscal plans to gradually help make this consolidation. When we look around the world, countries are in different places on monetary and fiscal policy, so authorities cannot simply take a cue from somebody else. We need to rely on national data to inform the appropriate policy stance. And many officials rightly spoke at this meeting about structural reforms, which they take on for productivity gains, for growth improvements, and for improvements in standards of living”, she outline.

Finally on Artificial Intelligence (AI), she said IMF staff has produced a very interesting country index on AI preparedness that can help inform governments’ efforts in dealing with the digital transition.”

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This marks a critical step toward securing the next tranche of funding from the International Monetary Fund (IMF), according to three sources informed Reuters.

The Official Creditor Committee (OCC), co-chaired by the governments of China and France, who are among the bilateral lenders, holds around 25% of Ghana’s $20 billion external debt earmarked for restructuring.

The upcoming meeting is expected to focus on reaching an agreement regarding a “cut-off date,” determining the point after which new loans from bilateral creditors will not undergo restructuring, sources familiar with the matter revealed.

This specific date has become a stumbling block in Ghana’s debt restructuring process.

Some creditors advocate for December 31, 2022, as the cut-off date, citing Ghana’s default earlier that month, while others support March 24, 2020, the date when the Group of 20 introduced the debt service suspension initiative (DSSI) to aid the world’s poorest countries during the COVID crisis.

Notably, Ghana did not participate in the DSSI.

In preparation for the OCC meeting on January 8, the Paris Club, consisting of major creditor nations (excluding China), will convene on Friday, according to two sources.

The Paris Club has shared a technical note with other creditors and multilateral lenders on Ghana, proposing December 2022 as the cut-off date, as per one source.

Although Ghana is still navigating the cut-off date issue, creditors have yet to reach a consensus. If an agreement on the cut-off date is achieved, it signifies that a broader consensus on debt restructuring is within reach.

Ghana, known for its gold, cocoa, and oil production, must secure an agreement on debt restructuring with official creditors to obtain approval from the IMF executive board for the next $600 million payout from a $3 billion rescue loan.

The IMF requires financing assurances to ensure that bilateral creditors are providing debt relief in line with the IMF program.

Having requested bilateral debt restructuring under the Common Framework a year ago, Ghana is also in talks with overseas bondholders to restructure its more than $13 billion in international debt.

Notable bondholders include major global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein, and Neuberger Berman.

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According to him, “we have successfully concluded the Domestic Debt Operations and are making steady progress on external debt restructuring”.

This is after the nation had undergone five exchanges under the DDEP with an overall exchange of GH₵203.4 billion which resulted in a breathing space of GH₵61 billion over 2023.

The Finance Ministry in their investor presentation in October 2023 indicated that “no further exchanges are being considered” as far as the completion of the DDEP is concerned.

This has further been strengthened by the indication in the 2024 budget that the domestic debt exchange has been concluded successfully.

The five big sacrifices made

As a necessity to get the $3 billion IMF bailout, Ghana was required to undertake a comprehensive debt rework which comprised both domestic and external debts.

The nation has undergone five series of exchanges under the Domestic debt operations including; the first leg of the DDEP, pension funds, USD-denominated local bonds, Cocobills and the Bank of Ghana non-marketable debt.

These exchanges, according to the Ministry of Finance, illustrate the commitment of the Ghanaian people to contribute to the Government’s effort to restore debt sustainability.

The details of the exchanges show that the first leg of the DDEP which was executed in two phases (December 5^, 2022, and September 13, 2023) had a GHS96 billion target, and saw a 90.7% participation rate at GHS 87 billion.

The next exchange was the pensions funds (July 31, 2023) which had a target of GH₵31 billion but saw an exchange amounting to GH₵29.7 billion representing 95.3% participation. The restructuring of USD-denominated local bonds of $809 million followed this.

The exchange saw a participation rate of 91.7% translating to $742 million (GHS8.23 billion).

The rework on the Cocobills also has a participation rate of 97.4% amounting to GH₵7.7 billion (the target was GH₵7.9 billion).

The last of the exchanges was the Bank of Ghana’s GH₵70.9 billion. This exchange saw a 100% participation rate with a 50% haircut with 15 years maturity date.

In all the nation has exchanged GH₵203.4 billion in the domestic debt operation translating to a debt service relief of GH₵61 billion.

Where are we with the external debt restructuring?

The external debt restructuring parameters involve bilateral debt and commercial debt (Eurobonds). The external restructuring is to complement the DDEP as part of efforts to achieve a sustainable debt level.

On December 13, 2022, Ghana formally requested debt treatment under the G20 Common Framework for Debt Treatment beyond the Debt Service Suspension Initiative (CF-DSSI).

 Ghana’s bilateral creditors subsequently established the Official Creditor Committee (OCC) on 12th May 2023, under the auspices of the Paris Club to restructure the bilateral debt. Ghana was able to get financing assurance from both creditors which enabled the securing of the $3 billion IMF deal.

The deal came with an initial disbursement of $600 million to Ghana as the first tranche of the bailout. The second tranche is yet to be disbursed upon approval of the first review by the IMF board and the attainment of specific debt restructuring terms with the external creditors.

The minister for finance during the presentation of the 2024 budget indicated that “An agreement in principle on the restructuring parameters is expected to be reached by end November 2023”.

This is in relation to the Official Creditors.

Meanwhile, the ministry in their October 2023 investors’ presentation outlined that, “Agreement in principle with OCC was expected by early November”.

The commercial debt (Eurobonds) according to the Finance Minister has received counterproposals on the debt treatment scenarios from the two bondholder groups.

However, the counterproposals are under review to converge towards a solution in compliance with the comparability of the treatment principle.

The Minister emphasized that in the coming weeks, the Government will start extensive negotiations with both groups to ensure that the targets set under the IMF/World Bank Debt Sustainability Framework.

In its latest assessment of Ghana where it upgraded Ghana’s credit rating to ‘CCC’ from Restrictive Default, the UK-based rating agency said the local-currency debt exchanges represent a debt service reduction of ¢52 billion in 2023, about 6% of estimated 2023 Gross Domestic Product or 39% of estimated 2023 revenue and grants.

According to the International Monetary Fund, a debt service represented 117% of revenue in 2022. Of this total debt service reduction, it estimated the interest payment reduction in 2023 amounts to 1.8% of GDP or 12% of revenue and grants.

Fitch also said the domestic US dollar-denominated debt exchange has added another ¢5 billion (0.6% of GDP, 4% of revenue and grants) debt service reduction in 2023, and a further reduction is coming from the 50% principal haircut agreed with Bank of Ghana on its holdings of ¢71 billion local-currency nonmarketable debt.

These debt exchanges, it stressed, have brought down interest payments to a still high 38% of revenue and grants in 2023, from 47% in 2022 (commitment basis, including interest payments that are due in 2023 on external debt), adding, “Fitch considers another round of local-currency debt exchange as
unlikely in the near term”.

Fitch also assigned ‘CCC’ issue ratings to two interest-only bonds that were issued to pension funds and to four domestic US dollar-denominated bonds, all issued as part of the domestic debt exchanges.

Fitch has also affirmed the ‘CCC’ issue rating on local-currency bonds that it assigned on March 22, 2023.

In August, Ghana made timely first coupon payments on these “new” bonds.

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Despite ongoing negotiations with various creditor groups such as the Paris Club, China, and bilateral creditors, progress has been sluggish.

As of June 2023, Ghana’s external debt has soared to $29.9 billion, making up over 57% of its total debt, prompting plans to restructure $10.5 billion of this sum.

The nation’s overall debt has exceeded $52 billion. This crisis stems from years of unbridled borrowing, leading to Ghana’s most severe economic downturn in decades.

By November 2022, the debt-to-GDP ratio had surpassed 93%.

In December 2022, Christmas came early for the Ghanaian government as they were handed an IMF Staff-Level agreement for a $3 billion loan facility, contingent upon the country restructuring its debt both domestically and externally.

This marked a departure from previous IMF programs.

The first tranche ($600 million) of the total bailout package has hit the Bank of Ghana’s account with the central bank hoping to receive an additional $600 million by the end of 2023.

But Ghana’s ability to receive subsequent installments of this loan hinges on successful external debt restructuring, particularly with big bilateral creditors like China and the Paris Club.

China holds a significant stake, with Ghana owing the superpower nearly $2 billion, including a substantial $619 million collateralized debt.

China’s commitment to debt restructuring is crucial, as it influences the stance of other creditors.

Without China’s cooperation, other creditors remain hesitant, making China’s role pivotal in Ghana’s efforts to restructure its external debt, which currently stands at an estimated $30 billion.

Although negotiations around Ghana’s external debt treatment have not been able to progress to from ASSURANCE to the AGREEMENT stage, authorities are very optimistic that an agreement will be reached soon with creditors.

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After trimming about ¢90 billion of its domestic debt through a debt exchange programme, the finance ministry is calling on almost all local bondholders to participate in another round of debt restructuring which they classify as the ‘DDEP REOPENING’.

The government is hoping to restructure about ¢13 billion to bring down the debt-to-GDP ratio. However, there seems to be widespread resistance to engaging in any new discussions about debt restructuring.

For instance, pensioner bondholders and individual bondholders’ forums have all rejected the call to participate in the new exchange and have insisted they want a complete exemption.

Even the Bankers Association of Ghana says they have no fiscal strength to endure another debt treatment after scarifying significant portions of their bonds in the first exchange programme.

Many experts have criticized the government for performing a shallow and somewhat unilateral first debt restructuring and this has compelled it to keep rolling out additional debt restructuring talks.

For instance, exemptions plus allowing some bondholders to convert their existing bonds to treasury bills resulted in the government losing about GH₵40 billion of its initial restructuring target of GH₵130 billion.

For the IMF, restructuring domestic debt is like surgery: You only do it if you must, and you avoid it if it might do more harm than good. The fund also cautions countries to do it right the first time to avoid doing it over and over again.

The International Monetary Fund (IMF) also urge nations to cast the net wide and be clear and transparent during a debt restructuring.

Additionally, the IMF cautions that some creditors may try to use their political influence to protect themselves from burden-sharing, thereby shifting the burden of the adjustment to other creditors.

Cast the net wide, be clear and transparent

To garner broad creditor participation in the restructuring and reduce the likelihood of costly litigation, the process of restructuring has to be perceived as fair and transparent.

The scope of claims for inclusion in any domestic debt restructuring—the perimeter—would generally depend on the amount of debt relief needed to restore debt sustainability and the net benefit that can be obtained from each type of claims.

In principle, all the government’s domestic debt liabilities could be included. Some creditors may try to use their political influence to protect themselves from burden-sharing, thereby shifting the burden of the adjustment to other creditors.

But casting the net wide and relying on voluntary mechanisms may help boost participation in the restructuring by lowering the relief sought from each creditor group.

A strategy that engages creditors constructively and transparently, that relies on market-based incentives, and that presents the debt exchange as part of a consistent macroeconomic plan typically works best.

Explaining convincingly how the restructuring fits with the broader strategy of addressing the causes that led to the sovereign debt stress is important to secure the political support needed for a successful operation that restores debt sustainability.

Anticipate and mitigate the damage

The domestic debt restructuring should be designed to anticipate, minimise, and manage its impact on the domestic financial system:

• The authorities need to put in place measures that mitigate losses for banks, non-bank institutional investors, and households and that minimize spillovers. For example, the impact on banks can be limited by extending the maturities and/or lowering the interest rate rather than reducing the nominal amount of the outstanding claims. Losses should be recognized early and may need to be paired with a strategy to restore banks’ capital buffers.
• System-wide emergency support that allows institutions to convert illiquid assets into cash may be needed to ensure the functioning of the banking system and shore up confidence. In some cases, temporary measures to slow panic-driven deposit withdrawals and capital outflows might have to be considered.

The authorities should carefully evaluate the potentially adverse consequences of unilaterally amending domestic law. The inclusion and use of collective action clauses in domestic debt contracts could increase legal certainty and predictability, offering a potentially superior restructuring mechanism compared to retrofitting such a mechanism by law.

Do it right the first time

Restructuring domestic debt is a tool that can be used by sovereigns facing fiscal and economic stress. To be successful it should be well-designed to avoid doing more harm than good.

To ensure that it is done right the first time, sovereign domestic debt restructuring should be part of a broader policy package that effectively addresses the underlying problems and debt vulnerabilities.

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The purpose of this summons is to provide a comprehensive briefing on the government’s entire debt restructuring program.

The move comes in response to concerns raised by the Minority about the lack of transparency and consistency in the government’s approach to debt restructuring.

The Minority, led by Cassiel Ato Forson, expressed their reservations about the secretive nature of the debt restructuring process and highlighted the government’s failure to keep Parliament informed about the specifics and the potential benefits and drawbacks of the program.

The lack of clarity has raised doubts about the government’s actions to manage its debt obligations effectively.

In response to these concerns, the Minority Leader, Cassiel Ato Forson, took the initiative and tabled a motion before the House, urging all Members of Parliament to support it.

The motion seeks to shed light on the opaque aspects of the debt restructuring plan and demands that the government provides a more detailed and transparent account of the program’s objectives and potential implications.

After the motion was presented, the Speaker, Alban Sumana Kingsford Bagbin, put it to a vote, and it received unanimous support from the Members of Parliament.

Consequently, the Speaker directed the Finance Minister, Ken Ofori-Atta, to appear before Parliament and present a comprehensive briefing on the entire debt restructuring program.

This directive aims to ensure that all parliamentarians and the public are well-informed about the government’s efforts to sustain its debt obligations and the potential impacts on the nation’s financial stability.

As the matter progresses, it is expected that the Finance Minister’s briefing will provide much-needed clarity and foster a more informed and open discussion among all stakeholders in the country’s financial management.

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The announcement was made as the GIPC indicated that negotiations with key partners are nearing a conclusion by the end of the week.

Mr Grant emphasized that the current fiscal gaps would be addressed through external financing measures, including $3 billion agreement with the International Monetary Fund (IMF) and the aforementioned debt restructuring.

“With the current fiscal gaps, we anticipate external financing for the budget through the anticipated $3 billion agreement with the IMF. Additionally, we are working on some external debt restructuring to provide financing of approximately $2.5 billion.

“We anticipate concluding negotiations with our other key partners tomorrow to further enhance our financial position,” he added.

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According to him, the main opposition to the government’s second round of domestic debt restructuring is due to the fact that since the first round the government has done nothing to address concerns about its mammoth size, nor has it reduced its expenditure as suggested by labour.

He said the government’s refusal to impose on itself the same austerity measures it is imposing on Ghanaians has largely fuelled the mistrust and opposition to the government’s latest policy which he believes is particularly favourable to pension funds.

Speaking on JoyNews’ PM Express, Senyo Hosi said it was about time government started heeding to the demands of the general public in order to soften the strong opposition to its policies and projects.

“For pension funds I think that they have to sit down and the president should listen small on this kind matter. There’s a theme going on that ‘Mr. President, we’re not seeing you live by example. Your government is also not being seen to be sharing in the pains that Ghanaians are going through.’ One of our members called me and he was livid, angry, what is his problem?

“He has gone to sit down, he’s flying to South Africa, he’s sitting down in the plane, and here are junior members of SOEs sitting in business class to South Africa, less than six hours. Plenty of them, sitting in business class, what’s wrong with you?

“You owe people you can’t pay, but you’re sitting there and then you’re flaunting spending their money in their face. It’s a bit insulting. These are petty petty things. If you pass a rule today, just like most corporates do, I’m telling you, go to the British Embassy, you’ll see what flights the staff there fly. Most of them fly economy going back to London but Ghana people who fly economy, middle officers, everybody business class.”

He has urged the president to issue a directive preventing government officials from flying business class for trips six hours and below.

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“I mean, show something. The president should issue a directive this business-class nonsense must stop. The truth of the matter is most of these people sitting there when before government they couldn’t even spell business class, but every day you see them and that is it.

“You know it’s ok, you’re going to America, plenty of hours, okay. You’re going somewhere less than six hours, six hours or less, a directive, everybody including ministers, everybody has to fly economy. When people start seeing signs like these everybody goes ok you’re also trying something,” he said.

The Minister in a signed release explained that the new proposal is aimed at alleviating the cash constraints on the government in the coming years, while fully compensating the Pension Funds for the value of their current holdings.

This comes after organised Labour rejected the inclusion of pension funds in the Domestic Debt Exchange programme.

According to the release, the new proposal has been “crafted to facilitate the execution of the MoU, addressing the Government financial needs while maintaining the value of the pension funds.”

Breaking down the new offer, the statement noted that “the proposed offer entails exchanging your current holdings of Treasury Bonds, ESLA bonds and Daakye Bonds for a menu of the currently outstanding New Bonds (issued in February 2023 and maturing in 2027 and 2028 respectively.

“New Bond 2027 and New Bond 2028 featuring an average coupon of 8.4 % with a ratio of 1.15x, thus entailing an increase in patrimonial value.

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“This complemented by an additional cash payment of 10% (strip coupon). The stream of coupons to be received as part of this proposal will therefore be 21% compared to the current 18.5% of the outstanding of old bonds.”

It continued “In 2023 and 2024, both instruments will pay 5% coupon in cash and the remainder will be capitalized into the nominal amount of the two bonds in order to comply with the cash constraints and the macro-framework defined under the programme with International Monetary Fund (IMF).”

According to the statement, the alternative offer has been designed to:

• Achieve the same average maturity as pension funds current holdings of the old bonds (currently between 4 and 5 years)
• Achieve a similar average coupon (currently at 18.5%) while
• Alleviating the cash constraints for the government over the first two years.

As a result, Mr Ofori-Atta urged that the Board of Trustees of pension funds to consider the proposal, adding that government is targeting to settle the offer by end of April 2023.

The Ajumako-Essiam Member of Parliament (MP) has described the move as Mickey Mouse, stating it will hurt Ghanaians in the long run.

“Mr President, please beware that, a Mickey Mouse form of debt restructuring will hurt Ghana big time. Your debt restructuring must not target domestic creditors. It will destroy us,” he said at an event dubbed Building Ghana We Want.”

For the first time in the history of Ghana, a debt restructuring programme is likely to take place because of the unsustainable level of the country’s debt, threatening the outlook of its economy.

This has become imminent in order to lessen the negative impact of the huge debt on the country’s economic fundamentals, particularly the real sector of the economy, inflation, exchange rate and money supply.

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At the moment, Ghana is seeking $3 billion in support from the International Monetary Fund (IMF).

But to the former Deputy Finance Minister said Ghana is in a deep mess because the managers of the economy failed to act.

“For them, everything is about the next elections, they never accept responsibility. They always say, ‘it wasn’t me, it was the guy behind the tree.’ They live on another planet and don’t appreciate what the IMF will require from them, let alone start the action. The ineptitude is unbelievable,” he stated.

Dr Forson has expressed optimism Ghana will require a debt relief of around GH¢200 billion to make Ghana’s current debt sustainable.

He stressed the economy is suffering from “Sovereign Insolvency Stress and Stagflation, Coupled with Acute Debt Overhang Syndrome.”