Ghana’s ambitious plans for economic stability in 2024 are on shaky ground as negotiations on external debt restructuring with official creditors move at a sluggish pace.
Over a week into the New Year, Ghana finds itself without a clear breakthrough in talks on external debt restructuring, casting uncertainty over the disbursement of a critical $600 million from the International Monetary Fund (IMF). The lack of a firm agreement from official creditors is a pivotal factor in unlocking the much-needed funds.
Bilateral creditors were scheduled to convene on January 8, 2024, to deliberate on the extent of debt relief, with a specific focus on establishing a common cut-off date. However, as of now, official creditors remain silent on the outcomes of this crucial meeting.
Ghana, actively seeking debt relief, aims to renegotiate approximately $5.4 billion of its bilateral debt. The delay in scheduled disbursements is attributed to Ghana’s struggle to secure the necessary financial assurances from external creditors, a prerequisite for unlocking around $2.2 billion in fiscal space vital for shoring up the balance of payments in 2024.
Concerns are mounting among experts and those familiar with Ghana’s IMF program, as the country’s inability to obtain required financial assurances raises the possibility of extending the program beyond 2026. This looming risk threatens Ghana’s access to the entire pool of available funds, potentially derailing the nation’s medium-term plan to restore debt sustainability levels.
Notably, this isn’t the first time Ghana has engaged with official creditors, particularly the Paris Club, for debt relief. The last similar negotiation occurred in May 2002 under the HIPC program, resulting in adjustments to Ghana’s debt servicing cut-off date and a rescheduling of remaining amounts over 23 years.
