Ghana has secured a Memorandum of Understanding (MoU) from the bilateral creditors on restructuring of their debts.

This was after members of the official creditor committee and Ghana’s bilateral creditors managed to secure the necessary approvals from their respective countries and Parliament on the terms for restructuring Ghana’s debts as agreed earlier this year.

Joy Business understands the committee will soon come out with a statement to confirm the deal.

Sources say even though the deal was reached in February 2024, the MoU was however delayed due to the drafting of the agreement.

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.

IMF MD on bilateral debt negotiations

The Managing Director of the IMF, Kristalina Georgieva, during a recent visit to Ghana, 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.

She stated that reaching a deal with the creditors, should provide the space for government to spend on critical areas to help stabilize the economy. 

Impact on Ghana’s IMF programme 

If the Official Creditor Committee Co-Chaired by France and China are able to issue the MoU, the development could fast track the process for the IMF second review report to reach the Management and the Board in June 2024 for approval.

This will aid in the release of some $360 million to Ghana.

The disbursement could help improve Ghana’s International Reserves.

It will also send a positive signal to donors and the investor community.

IMF MD on negotiations with private creditors

Ms. Georgieva advocated for Ghana to be tactful in the debt negotiations with Eurobond holders and commercial creditors.

In her earlier meetings with President Akufo-Addo in Ghana, she cautioned against steps that could jeopardize the current engagement with the private creditors.

“Ghana is indeed benefiting from the experiences of countries that have gone for debt restructuring under the common framework”, she said.

She added that comparability of treatments becomes a benchmark for the success of the debts restructuring.