In the midst of the current economic challenges, Ghana turned to the International Monetary Fund (IMF) for a bailout of $3 billion dollars.

Before securing this deal, the government was required to undertake both domestic and external debt restructuring programs to alleviate the mounting debt service burden on its economy. 

The nation initiated a domestic debt restructuring program with a 85 per cent participation rate, as reported by the Ministry of Finance. This initiative resulted in debt service savings amounting to GH₵‎34 billion.

Ghana additionally obtained approval from its external creditors to embark on an external debt restructuring programme. This approval was instrumental in securing the much-needed IMF bailout, which was granted on May 17, 2023.

Ghana is currently targeting $10.5 billion over the next three years (2023-2026).

This translates to a potential haircut of 35 to 40 per cent for creditors, signalling the magnitude of the challenge faced by investors in the impending debt overhaul.

In view of this, the former Minority Leader and Member of Parliament for Tamale South, Haruna Iddrisu has raised concerns about how these measures could impact project financing in the country.

According to him, the huge haircuts and deferred interest payment until the end of the IMF Program, means projects that are being financed with loans will come to a standstill if not completely terminated and this will be at an extra cost to the country.

The Tamale South MP believes that the government’s inability to complete the domestic debt restructuring, over-reliance on short-term borrowing and the high cost of Treasury bill could be detrimental to progress made with the IMF deal.

Ghana’s total external debt stands at $30.5 billion dollars. Of this total, $20 billion is eligible for external debt restructuring.

This eligible amount comprises $5.4 billion from bilateral official creditors while external bondholders account for $14.6 billion.