Ghana has made progress with its debt burden, says, Mr Ajay Banga, President, World Bank Group (WBG).

“Zambia got out of the debt situation after a long process but we’ve seen progress with Ghana and other countries,” Mr Banga said.

Mr Banga was speaking during the opening press briefing on Wednesday, October 11, 2023, at the ongoing WBG/International Monetary Fund (IMF) Annual Meetings in Marrakech.

However, Mr Banga urged Ghana to ensure that it completed its debt treatment with external creditors, and created the right regulatory framework for macroeconomic stability and an environment for businesses to flourish.

Ghana’s public debt rose from 79.6 per cent in 2021 to over 90 per cent of Gross Domestic Product (GDP) in 2022, as debt service-to-revenue reached 117.6 per cent, IMF data showed.

That pushed the country for a 17th Extended Credit Facility (ECF)-support scheme with the IMF in 2022 for the implementation of a Post-COVID-19 Programme of Economic Growth (PC-PEG).

Mr Banga explained that such a debt burden hindered development as it squeezed the ability of investors to put their money into things that countries needed to grow sustainably.

“I wish there’s a magic wand that says, abracadabra, we’ll just wipe the debt out of the system, but I don’t think that’s likely to happen,” the World Bank president said.

He, therefore, encouraged Ghana and other countries going through debt restructuring to speed up efforts in completing, particularly, their external debt treatments.

“The reality is that what you need to do to get the form of debt exchange in these countries are overseas, not domestic debt,” he said.

He added, “It’s important to get the facts ready, get the creditors to agree and move past it, and get better regulatory and macroeconomic frameworks into these countries so, that we don’t fall into these same trap years down the lane.”

The World Bank president also called on Paris Club and non-Paris Club countries, as well as commercial creditors to sit at the table with debtors to agree on a country-by-country basis on debt treatments.

In a related development, Madam Kristalina Georgieva, Managing Director, IMF had lauded Ghana for the completion of its first Staff-Level Agreement on the review of the Fund’s US$3 billion loan-support programme.

“Congrats on the Staff-Level Agreement on the Fund-supported programme’s first review,” she said in a Tweet after a meeting with Mr Ken Ofori-Atta, Finance Minister, and Dr Ernest Addison, Governor, Bank of Ghana.

“Counting on bilateral creditors reaching agreement on debt relief soon to move the review forward,” the IMF Managing Director said.

Ghanaian authorities are currently at the WBG/IMF annual meetings in Marrakech to cement efforts to reach an agreement with its external creditors on the signing of a Memorandum of Understanding (MoU) by November 2023.

The MoU would spell out specific debt treatment that external creditors would agree with Ghana as part of the implementation of the government’s ongoing three-year US$3 billion IMF loan-support programme.

The loan-support programme is to ensure Ghana’s macroeconomic stability, and debt sustainability and chart a path for inclusive growth while protecting the vulnerable.