GHANA’S prolonged debt restructuring process has moved closer to completion as the country received a draft memorandum of understanding (MoU) from its bilateral creditors, including France and China, for their $5.4bn share of the deal on Friday. This development marks a significant milestone in Ghana’s efforts to stabilise its economy and address its mounting debt crisis.

‘Ghana is committed to addressing its debt challenges and stabilising the economy. The draft MoU is a significant step towards achieving sustainable debt levels,’ said Mohammed Amin Adam, the new finance minister.

Timeline of key events:

February 2022: Credit ratings agency Moody’s downgrades Ghana’s credit rating from B3 to Caa1, citing ‘very high credit risk.’ This follows a similar downgrade by Fitch in January.

March 2022: Ghana’s central bank raises interest rates by 250 basis points to 17 percent to combat rising inflation and a weakening currency.

April 2022: Parliament approves an ‘e-levy’ tax on electronic payments to increase revenue.

May 2022: Finance Minister Ken Ofori-Atta announces Ghana will manage its debt without IMF assistance.

July 2022: Amid public protests, Ghana requests an IMF loan to address economic hardships.

July 2022: Parliament approves a $750 million loan from the African Export Import Bank to avoid default.

August 2022: Another record interest rate hike by the central bank as inflation soars.

December 2022:

• Ghana launches a domestic debt exchange to manage spiralling debt payments.
• Reaches a staff-level agreement with the IMF on a $3 billion rescue package, conditional on debt restructuring.
• Announces default on most external debt.

January 2023: Ghana seeks debt restructuring under the G20’s Common Framework, involving China, India, and other non-Paris Club nations.

February 2023: Domestic debt exchange concludes with 85% bondholder participation. Bilateral creditors begin committee formation talks.

March 2023: Government and international bondholders commence debt restructuring negotiations.

May 2023: Official creditors form a restructuring committee co-chaired by China and France, providing IMF-required financing assurances for the $3bn rescue loan.

June 2023: Ghana proposes restructuring to official creditors, aiming to reduce $10.5 billion in interest payments over three years.

October 2023: Reaches staff-level agreement with the IMF on the first review of the loan programme. The finance ministry proposes a 30-40 percent haircut to bondholders.

January 2024: Ghana reaches a deal-in-principle to restructure $5.4bn of debt with official creditors leading to IMF approval of the next loan tranche.

February 2024: Mohammed Amin Adam replaces Ken Ofori-Atta as finance minister, pledging to maintain IMF programme adherence.

March 2024: Formal debt restructuring talks with international bondholders begin.

April 2024: Talks stall as Ghana rejects bondholder proposals.

May 2024: Ghana confirms receipt of the draft MoU from bilateral creditors, set to formalise the January agreement upon signing.

Credit: Africa Briefing