Ghana’s Finance Minister, Ken Ofori-Atta, announced on Monday that the country is set to re-engage with its international bondholders starting next week. This initiative follows a recent successful deal to restructure $5.4 billion of official creditor debt. Ofori-Atta conveyed the country’s intention to continue discussions after a meeting with holders of its approximately $13 billion outstanding Eurobonds in Marrakech last October. He shared these insights during an interview at the World Economic Forum (WEF) annual meeting.
Highlighting the importance of ongoing negotiations, Ofori-Atta disclosed plans for officials to travel to China on January 23. China and France co-chair Ghana’s Official Creditor Committee, and the agreement reached with this committee played a pivotal role in unlocking additional funding from a $3 billion International Monetary Fund (IMF) rescue loan.
Ghana faced challenges, defaulting on a significant portion of its overseas debt in December 2022 due to soaring debt servicing costs. The country is actively seeking to restructure $20 billion of external debt, which stood at around $30 billion at the close of 2022. Notably, Ghana has already successfully restructured most of its local debt.
Describing the restructuring negotiations from the past year as a “very difficult, painful process,” Ofori-Atta expressed optimism, stating that Ghana has built substantial momentum. The IMF board is scheduled to meet on Friday to decide on a $600 million disbursement from Ghana’s bailout program, with approval expected to unlock funding from other multilateral lenders.
Additionally, Ofori-Atta noted that the World Bank is anticipated to decide on $550 million in funding on January 25. These funds are considered crucial for Ghana’s financial stability.
Ghana is navigating its debt restructuring under the Common Framework, a process established by G20 countries during the COVID-19 pandemic. While the Common Framework has faced criticism for its slow results, Ofori-Atta highlighted positive macroeconomic indicators for 2022. Despite a challenging start, he noted improvements in revenue and a decline in inflation. Consumer inflation, for instance, slowed to 23.2% year-on-year in December, a significant improvement from the more than 50% recorded when the country entered default. Concurrently, the country is experiencing growth at a rate of 3%, surpassing the IMF’s projected rate of 1.2%.
(Reuters)
