External debt restructuring: Deal with external creditors marks major turning point for economy – Ofori Atta

Finance Minister, Ken Ofori-Atta, has described the debt restructuring deal with external creditors as a major turning point for the economy.

According to him, this should help Ghana fast-track the process to reduce its debt to sustainable levels.

Ofori Atta disclosed this on PM EXPRESS BUSINESS EDITION with host George Wiafe. The interview will be aired on JOYNEWS this Thursday, January 18, 2024.

Ofori-Atta explained that the agreement with the official creditors on the terms for restructuring Ghana’s debt did not come easy, but praised the work done by officials of the Finance Ministry, the government and the cooperation of the creditors in reaching this agreement.

This he believes “shows that all the partners are committed to helping Ghana in restoring debt sustainability in line with the IMF’s programme targets”

Background

The Finance Ministry in a statement on January 12, 2024, announced that it has reached an agreement with the Official Creditors Committee on the debt treatment under the G20 common Framework.

This came after months of negotiations over the cut of date for restructuring Ghana’ debts.

However, after that final round of meetings last week, all the members of the OCC agreed on December 2022 as the deadline for restructuring Ghana’s debts.

The Managing Director of the IMF, Kristalina Georgiva, in a statement welcomed the debt treatment agreement.

According to her, “This agreement clears the path for IMF Executive Board consideration of the first review of Ghana’s three-year Extended Credit Facility Arrangement in the next few days”.

She added that “The Government of Ghana looks forward to further engaging with the Official Creditors to ensure prompt implementation of the agreed terms”.

Proposed terms reached with creditors for restructuring Ghana’s debt

The Finance Minister had been tight lipped of the details of the “term sheet”. He, however, did not rule out December 2022 as the cut-off date for restructuring Ghana’s debts.

Ofori-Atta also did not dispute the fact that Ghana will now start servicing its debts after the four-year moratorium. Payment will however commence after five years.

Interest rates on these debts will likely be pegged between 2 -3%

Ofori-Atta added that Ghana is still in discussion with the official creditors to finalise the Memorandum of Understanding for the deal with the official creditors.

He noted that “the terms of the agreed debt treatment are expected to be formalised in an MoU between Ghana and the official creditors in the coming days”.

But will this affect the proposed date for the IMF Board meeting, the Finance Minister responded “No because the agreement reached with them is enough for the IMF Board to meet”.

We are prepared for this Board meeting and hopeful that Ghana will pass this first review”, the Finance Minister added.

The MoU will be implemented through bilateral agreements with each member of the Official Creditor Committee, the minister added.