Ghana’s path to economic recovery in the wake of the recent crisis is receiving renewed hope from three major global financial and development institutions on debt operations.
The three institutions – International Monetary Fund (IMF), World Bank Group and the Group of 20 Presidency (G20), have all pledged to increase concessional financing to Ghana to address the country’s current debt challenges.
The financing support will be extended to other developing countries who are equally going through debt restructuring processes to be more efficient and resilient economically.
Ghanaian authorities in December last year reached a Staff-Level Agreement with the IMF and are currently awaiting the Fund’s Executive Board approval for the three-year $3 billion loan-support programme under the Extended Credit Facility (ECF).
The country has completed its Domestic Debt Exchange Programme (DDEP) and is engaging its external creditors for financing assurances for the loan facility, which is aimed at restoring macroeconomic stability and protecting the vulnerable.
At the ongoing IMF/World Bank Spring Meetings, a nine-member delegation has been sent from Ghana to engage commercial, bilateral, and multilateral creditors to secure the IMF Board approval.
“Work will be undertaken on principles regarding cut-off dates, formal debt service suspension at the beginning of the process, treatment of arrears, and perimeter of debt to be restructured, including domestic debt [for Ghana and other developing countries],” Kristalina Georgieva, Managing Director, IMF, said at the end of the meeting of the Global Sovereign Debt Roundtable (GSDR) discussion, on the sidelines of the IMF/WBG spring meetings.
Ms Georgieva said the IMF, World Bank and the G20 would continue to work closely with other partners to further support international response to the current debt challenges and clarify potential timetables to accelerate debt restructurings.
At the end of the meeting, participants agreed to provide positive net flows and an advanced implicit debt relief through increased concessional financing and grants to countries facing higher risks of debt distress, including Ghana.
Such financial relief will be provided with the support of Multilateral Development Banks, International Development Association (IDA) and the G20 Common Framework.
David Malpass, WBG President, emphasised the need for equal burden sharing among official bilateral and private creditors and for acceleration of ongoing restructurings to avoid further default of payments and ensure debt sustainability.
He was confident that the GSDR group could break through the debt impasse and reach meaningful debt restructuring – through early information sharing by the IMF and the World Bank.
Nirmala Sitharaman, Finance Minister, Republic of India, also called for an upscale in current global efforts, including those of the G-20 to address growing debt distress across the globe.
She said it was important for information to be provided on debt transparency, clarity on the comparability of treatment, predictability and timeliness of the debt restructuring process, as well as ways to assess and enforce and the timelines for the steps involved in debt restructuring.
Participants at the meeting included the three co-chairs (IMF, World Bank and India as G20 Presidency), official bilateral creditors (China, France as chair of the Paris Club, Japan, Saudi Arabia, United Kingdom, United States).
Debtor countries (Ghana, Ecuador, Ethiopia, Sri Lanka, Suriname, Zambia), Brazil as the forthcoming 2024 G20 Presidency and private sector representatives (Institute of International Finance, International Capital Markets Association, BlackRock, Standard Chartered) were also at the meeting.
