Debt restructuring: The country aims to save $10.5 billion.

Debt - Rapid News GH

According to a study from the International Monetary Fund (IMF), the government aims to reduce its foreign debt by $10.5 billion between this year and 2026 by engaging its external creditors in debt restructuring.

Bilateral and commercial creditors are included among the external creditors.

On December 19 of last year, the government announced a suspension of debt service on external commercial obligations, and since then, negotiations for a debt restructuring have been ongoing.

The government is attempting to restructure its $14 billion in bonds and $13 billion in other commercial debt.

The government is anticipated to commence debt restructuring negotiations with its bilateral creditors in the coming days in an effort to restructure debts totaling around $5.4 billion, following the formation of the Creditor Committee of the Paris Club supported by China.

The Minister of Finance, Ken Ofori-Atta, stated at a press conference yesterday by the IMF in the capital of the United States, Washington DC, that the government was looking forward to a successful engagement with its bilateral and private creditors in the days to come as the nation worked toward achieving debt sustainability, which would anchor economic stability.

The nation is scheduled to lower its debt to Gross Domestic Product (GDP)-ratio from the current 93.5% to 55.0% under the terms of the IMF program.

The way to recovery

The acceptance of Ghana’s IMF package, according to Mr. Ofori-Atta, would put the nation on the road to economic recovery.

He said that although the IMF board’s approval was far from a magic wand, it was an important first step on the path toward the economy’s recovery through bold reforms, inclusive growth, and the tenacious pursuit of a growth agenda.

“Undoubtedly, the economic toll on our people from the effects of the global crisis cannot be understated, and we are grateful for the forbearance of all Ghanaians in the wake of the Domestic Debt Exchange Programme, which is a difficult but necessary exercise,” the Finance Minister said.


An early release of around $600 million resulted from the IMF Executive Board’s approval of a $3 billion bailout to boost Ghana’s economic recovery last Wednesday.

As the Bank of Ghana utilized them to support the Ghana cedi, foreign exchange reserves in Ghana have decreased by approximately 50% since their peak in August 2021. The loan will help restore those reserves.

For the 17th time, the nation turned to the Bretton Woods institution for assistance with the three-year Extended Credit Facility program.

Financial sector

The DDEP had a significant impact on the nation’s banks, Mr. Ofori-Atta continued, and the government looked forward to collaborating with them to achieve the necessary financial stability.

He said that $1.5 billion would be invested in the Ghana Financial Stability Fund, which had been formed to support institutions impacted by the DDEP.

“$250 million is coming from the World Bank, $500 million will come from the government, and we’re still talking to other development partners about joining in,” he said.

According to Mr. Ofori-Atta, the administration is anticipating receiving assistance from the World Bank in the third quarter of this year.

Returning to the stock market

The government was not in a haste to return to the international capital market to raise more money, the finance minister added.

However, Mr. Ofori-Atta stressed that it was crucial to work toward a return to the capital market since doing so would help raise the nation’s credit ratings and make it more appealing to foreign investors.

The revenue strategies detailed in the 2023 budget, according to the finance minister, will provide the government with the resources it needs moving ahead.

In order to avoid rushing back to the international capital market, he added, “We will also cut our spending. We anticipate having the necessary resources in managing our expenditure and growing our revenue.”

Developmental associates

Dr. Ernest Addison, governor of the Bank of Ghana, participated at the press conference via Zoom as well. He stated that the acceptance of Ghana’s program would serve as the foundation for future interactions between Ghana and its development partners.

He claimed that the IMF program should not only be seen in terms of budget support since it also had advantages that much outweighed that.

The fact that the program outlines policies and structural reforms that should help Ghana reset our economic policy fundamentals is what matters most, the Governor said. “While the budget support helps with the current reserves of the central bank, what matters most is that the programme sets out policies and structural reforms that should help Ghana reset our economic policy fundamentals,” he added.

“These reforms should re-anchor policy and embed irreversibility in our policy outcomes to make sure our economy is more resilient,” Dr. Addison said.

Time for work

The Governor also emphasized the need to strive toward the nation’s economic recovery at this time.

“This programme approval is just the beginning of the real work of building Ghana better,” he said.

According to Dr. Addison, the program’s quick approval by the IMF Executive Board was a sign of the government’s strong political commitment to the reform objective.

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