Ghana and the panel of creditors agree on debt restructuring, opening the door for IMF funding

Ghana’s finance ministry announced on Wednesday that the country has completed an agreement with its official creditor committee to formally ratify a debt restructuring arrangement reached in January, paving the way for the release of further funds from the IMF.

The agreement’s general parameters facilitate the IMF executive board’s approval of a second assessment of a $3 billion loan package and the delivery of the subsequent $360 million tranche.

The finance ministry released a statement saying, “The approval of the IMF Board should also trigger more financial assistance from our development partners, particularly the World Bank.”

The news validates a story published by Reuters last week indicating that the formalization of a memorandum of understanding was imminent.

After going into default on a large portion of its foreign debt in 2022 due to skyrocketing servicing costs, Ghana is restructuring its debt to aid in its recovery from the greatest economic crisis in a generation.

The ministry stated that each creditor country is now anticipated to sign the deal separately and that this will support ongoing restructuring talks with private creditors.

By 08:37 GMT, there had been minimal movement in Ghana’s sovereign dollar bonds. The majority of the issues were trading between 50 and 51 cents on the dollar, a distressed level indicating that the market anticipates reductions in private debt.

According to the ministry, the terms of the agreement with official creditors were not altered from the one reached in January, and it offered “significant debt service relief” for the duration of the program backed by the IMF.

Due to bad harvests, Ghana, the second-biggest cocoa producer in the world, is also experiencing delays in the delivery of cocoa, which might reduce its revenue and exacerbate its debt problems.