Following an agreement to restructure US$5.4 billion with its official creditors, Ghana is scheduled to receive the US$600 million second tranche of the US$3 billion rescue loan, according to three sources who spoke with Reuters.
The International Monetary Fund (IMF) executive board is scheduled to convene on Friday, January 19, to approve this payment.
Ghana reached an agreement late last week with its bilateral lenders, which included China and France. This was a crucial step in enabling the IMF to release the second tranche of funds as part of a US$3 billion bailout.
The debt deal agreement, which was welcomed on Friday by IMF Managing Director Kristalina Georgieva, paves the way for the executive board’s initial evaluation of Ghana’s programme.
Following a sharp increase in debt servicing costs, the nation defaulted on the majority of its external debt in December 2022. It also needs to come to a relief agreement with private holders of foreign bonds worth roughly US$13 billion. Monday saw an almost 1 cent increase in bond prices relative to the dollar. The 2042 maturity saw the highest increase, rising 0.82 cents to 43.09 cents, its highest level since early November.
Chinese Foreign Ministry spokesperson Mao Ning said on Monday, “Recently, China encouraged all parties to overcome technical difficulties and narrow differences and finally led all parties to reach a basic consensus on Ghana’s debt settlement plan on January 8.”
Meanwhile, some members of the Official Creditor Committee, which is co-chaired by China and France, are still “going through their internal procedures,” she told reporters at a regular media briefing.
The IMF second tranche payout, once signed-off, should also trigger US$550million in additional World Bank funding, Ghana’s finance ministry said last week Friday.
The government reached an agreement with its Official Creditors, under the G20 Common Framework, on a comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative. Following the successful completion of the Domestic Debt Exchange Programme (DDEP) in 2023, this development constitutes a significant positive step toward restoring Ghana’s long-term debt sustainability, according to the Ministry of Finance in a statement on Saturday, January 12, 2024.
This agreement with Official Creditors paves the way for IMF Executive Board approval of the first review of the Fund-supported programme – allowing for the next IMF financing tranche of US$600million to be disbursed. The IMF Board Approval should also trigger World Bank Board consideration of US$300million Development Policy Operation (DPO) financing. In addition, the World Bank is expected to support the Ghana Financial Stability Fund with US$250million to help address the impacts of the Domestic Debt Exchange Programme (DDEP) on the financial sector.
Ghana’s economy is said to have turned the corner, yet its significant reform agenda depends heavily on these payouts.