Minister of Finance, Ken Ofori-Atta, along with some government officials, is set to embark on a crucial visit to China on January 23 in a bid to restructure its $5.4 billion bilateral debt.
A significant portion of the debt is owed to China.
The restructuring efforts play a pivotal role in unlocking additional funding from a $3 billion International Monetary Fund (IMF) bailout package, with China and France co-chairing Ghana’s Official Creditor Committee.
The agreement with the committee is essential for Ghana, as it seeks support not only from the IMF but also from other multilateral lenders.
A pending IMF board meeting on January 19, 2024, holds the key to a $600 million disbursement from Ghana’s bailout program, and approval would pave the way for funding from various sources.
Ghana is also set to re-engage with its international bondholders starting next week, building on the momentum gained from a recent deal to restructure $5.4 billion of bilateral debt.
Finance Minister Ofori-Atta expressed optimism despite acknowledging the challenges faced during the previous year’s negotiations, labeling them as a “very difficult, painful process.”
The restructuring endeavors align with the Common Framework, established by G20 countries during the COVID-19 pandemic, though criticized for its perceived slow progress.
Ghana defaulted on its external debt in December 2022 due to soaring debt servicing costs. Now, the nation is actively working to restructure $20 billion of external debt, aiming to address its total debt of approximately $30 billion at the end of 2022.
The outcome of these negotiations will significantly shape Ghana’s financial landscape in the coming months.