GHANA has signed a memorandum of understanding (MoU) with its official creditors, formalising a debt restructuring agreement reached last year, the country’s finance ministry announced on Wednesday.
According to Reuters, the deal marks a significant milestone in Ghana’s ongoing efforts to stabilise its economy after defaulting on most of its external debt in December 2022. The West African nation, one of the world’s top gold and cocoa producers, has been grappling with a severe financial crisis, prompting it to seek debt relief under an IMF programme.
Debt relief under IMF programme
The agreement with official creditors was initially reached in June 2023. With all participating creditor nations now signing the deal, Ghana’s finance ministry said the restructuring would provide ‘significant debt-service relief’ within the framework of its IMF loan programme.
The government has not disclosed specific terms of the agreement, but financial analysts believe the deal will help Ghana reduce its debt burden and restore investor confidence. The restructuring is expected to ease pressure on Ghana’s foreign reserves and create fiscal space for economic recovery.
Talks with commercial creditors continue
While the agreement with official creditors is a crucial step, Ghana is still negotiating with commercial external creditors to finalise restructuring terms. These creditors include holders of Ghana’s Eurobonds, which make up a significant portion of the country’s external debt.
‘The government remains committed to engaging all stakeholders to ensure a comprehensive debt restructuring process,’ the finance ministry said in its statement.
Ghana’s economic recovery efforts
Ghana’s financial challenges have been exacerbated by high inflation, a weakening currency, and rising borrowing costs. In May 2023, the IMF approved a $3bn bailout package to help stabilise the country’s economy, with debt restructuring being a key requirement for continued financial support.
Economic experts believe that securing a deal with commercial creditors will be Ghana’s next major hurdle. ‘The agreement with official creditors is an important step forward, but the real test lies in how Ghana manages negotiations with bondholders,’ an analyst told Reuters.
As Ghana continues its recovery journey, the debt restructuring process remains a critical factor in determining the country’s long-term financial stability.
