The country has achieved a significant milestone in its debt restructuring efforts as all participating creditor countries have now signed the Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC), marking a crucial step towards the country's economic recovery.

Under the terms of the agreement, Ghana will receive a debt service relief of $2.8 billion during the International Monetary Fund (IMF)-supported programme period, enabling the government to redirect financial resources towards economic recovery initiatives and critical development projects.

The implementation phase will now proceed through bilateral agreements with each member of the OCC with the Ghanaian authorities committing to expediting the individual arrangements to ensure swift execution of the debt treatment plan.

Press conference

Addressing the media in Accra yesterday, the Minister of Finance, Dr Cassiel Ato Forson, expressed the government’s gratitude to China and France, Co-chairs of the creditor committee, for their leadership role in facilitating the breakthrough agreement to restore Ghana's long-term debt sustainability.

Context

In a bid to reduce the debt-to-GDP (Gross Domestic Debt) ratio to 55 per cent by 2026, Ghana embarked on a debt restructuring exercise which comprised the domestic and external creditors under the three-year IMF programme.

Dr Cassiel Ato Forson, Minister of Finance, explaining a point at the media briefing. Picture: EDNA SALVO KOTEY

After months of prolonged negotiations with the Bilateral Official Creditor Committee co-chaired by France and China, the Ministry of Finance, on January 12 last year, announced that the country had reached an agreement with its official creditors under the G20 Common Framework on a comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative (DSSI).

The terms of the agreed debt treatment were expected to be formalised in an MoU between Ghana and official creditors, which would then be implemented through bilateral agreements with each member of the OCC.

The signing of the agreement by all 25 participating countries, therefore, almost brings the exercise to an end.

Restructuring exercise

Dr Forson emphasised that the restructuring had become necessary because the country’s debt at the time was unsustainable and there was a need to meet the debt sustainability threshold for low-income countries.

The debt restructuring efforts were, therefore, aimed at reducing debt to GDP ratio to below 55 per cent by 2028 in present-value terms; reducing the standard debt service to revenue ratio to below 18 per cent from 2028 onwards and ensuring that no external financing gap exists within the IMF programme period.

The Finance Minister said on the orders of the President, he started engaging the technical team of the ministry even before his approval as minister to discuss the state of affairs, create a timeline and outline an action plan for implementation.

Since then, he said, the Ministry of Finance team had worked tirelessly to advance the President's directive.

“Today marks a significant milestone from the team, and we are pleased to inform all that the memorandum of understanding with the official creditors' committee last June has now been fully signed by all 25 participating creditor countries,” he said.

Dr Forson said signing the agreements constituted an important milestone in Ghana's debt restructuring journey.

“We now have a strong and detailed framework to implement the financial terms through a bilateral agreement with the official creditors,” he said.

Commercial creditors

Dr Forson revealed that the ministry was also working to make further progress with private banks which the country owed about $2.7 billion in the coming weeks.

In these discussions, he said, the government would be guided by the most favoured creditors' clause and the principle of comparability of treatment.

“As minister, I will expedite our engagement in order to complete the remaining seven per cent of the debt restructuring”.

“We take this opportunity to appreciate the efforts and support so far by the external commercial creditors and urge them to support us to complete this process as soon as possible,” the Finance Minister said.

Economic recovery

With the progress on the debt restructuring, Dr Forson said the government would now focus on economic recovery through the implementation of an ambitious reform agenda.

That would lay the foundation for a strong and inclusive growth for all Ghanaians, the Minister of Finance assured the citizenry.