Ghana’s Finance Minister, Dr Mohammed Amin Adam, has asked countries facing debt restructuring setbacks, to burden-share, be transparent and simplify their negotiation processes. 

That, he said, would assure creditors of the countries' commitment and willingness to also sacrifice and help to reduce the long periods of debt restructuring in Africa. 

Dr Amin Adam said this in a conversation on the margins of the 2024 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) on IMF Today, in Washington DC (USA). 

According to the IMF, the average debt ratio of Sub-Saharan Africa almost doubled in a decade – from 30 per cent of Gross Domestic Product (GDP) at the end of 2013 to nearly 60 per cent of GDP by the end of 2022. 

The African Development Bank (AfDB) also estimated that the region’s total external debt, which stood at US$1.12 trillion in 2022, had risen to US$1.152 trillion by end-2023, raising concerns of repayment as doing so had become costlier. 

The situation poses a challenge for the region to raise the US$1.6 trillion estimated by the Organisation for Economic Cooperation and Development (OECD) for Africa to meet the sustainable development goals by 2030. 

Dr Amin Adam stated that Ghana was able to restructure its Eurobonds debt in about nine months as compared to the two-year average by other countries due to burden sharing, simplicity, and transparency. 

Speaking about the lessons from Ghana’s debt restructuring as a guide to other African countries, he said, “You cannot go to creditors and ask them for relief when you’re not restructuring your domestic debt to put your house in order.” 

“We had to do domestic debt exchange, which you’ve not seen many countries do. Because of that the bilateral creditors as well as our Eurobond holders saw Ghana’s seriousness and readiness to change,” he said. 

The country’s Domestic Debt Exchange Programme (DDEP), he said,  was a painful way the country had to take in restructuring its debt, but that costly decision paid off eventually.  

“The sacrifice of our people in biting part of the bullet before we went out to do the external debt restructuring brought [the external creditors] closer to us, and helped with the negotiation,” he stated. 

Dr Adam also advised African countries to focus on restructuring of the principal and coupons of their debt, “as opposed to the State contingent instruments, which is very complex.”