The World Bank Board has welcomed the agreement in principle on the key parameters of the proposed debt restructuring for Ghana reached by the Official Creditors’ Committee under the G20 Common Framework.
According to the Bretton Wood Institution, the agreement is consistent with the Joint WB-IMF Debt Sustainability Framework and represents a critical milestone toward restoring debt sustainability in this country.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, has stated that the agreement will unlock some $300m in budgetary support from the World Bank’s International Development Association (IDA) for the Government of Ghana.
“This agreement will help unlock financial support by international financial institutions, including a $300 million budget support operation supported by IDA, which will be considered by the World Bank’s Board of Executive Directors next week. This will help Ghana in its recovery, attracting investments and restoring a sustainable growth path,” he remarked.
According to Mr Diagana, the $300m budgetary support falls under the Resilient Recovery Development Policy Operation which is the first in a series of three operations totaling $900 million and part of a broad World Bank engagement in support of crisis response and resilience in Ghana.
Overall, the country implements $4.3 billion in commitments from the World Bank through national and regional projects focused on private sector development and jobs, inclusive service delivery, and sustainable resilient development.
Ghana won a moratorium with official creditors on debt payments through May 2026, and expects to reach a deal with Eurobond investors to revamp $13 billion debt by the end of March.
Finance Minister Ken Ofori-Atta said the payments owed on $5.4 billion of bilateral obligations would be repaid in two tranches in 16 and 17 years’ time, under the terms of the deal struck in principle last week.
Speaking from the World Economic Forum in Davos, he said the agreement with official creditors also “builds momentum and confidence” to revamp the Eurobond debt.
“There’s a sense globally that Ghana has done its part and therefore talking to the Eurobond investors, there’s a sense of urgency,” he said.
Ghana’s pact with official creditors, announced Jan. 12, means debt payments from 2023 would be repaid in 2039 and 2040, while debt service due in 2024 would be repaid in 2040 and 2041.
The forbearance will run for the duration of Ghana’s program with the International Monetary Fund which ends in May 2026.