Ghana’s creditors commit to negotiate debt relief, IMF excited
The Official Creditor Committee comprising Ghana’s creditors commit to negotiating a debt restructuring.
This paves the way for the International Monetary Fund (IMF) to approve a $3 billion lending programme.
A statement issued by the Paris Club said the Committee is c0-chaired by China and France.
Ghana’s creditors commit
The creditor committee said it examined the macroeconomic and financial situation of Ghana, including its long-term debt sustainability, and its formal request for a debt treatment under the “Common Framework for Debt Treatments beyond the DSSI” endorsed under the Saudi G20 Presidency in November 2020, which was also endorsed by the Paris Club.
Ghana and IMF agreed a staff-level agreement for the $3 billion support package in December, but the IMF executive board was waiting for financing assurances from the Paris Club to formally approve it.
According to the statement, the creditor committee supports Ghana’s envisaged IMF upper credit tranche (UCT) programme and its swift adoption by the IMF Executive Board to address Ghana’s urgent financing needs.
The creditor committee encourages Multilateral Development Banks (MDBs) to maximize their support for Ghana to meet its long-term financial needs.
Consistent with their national laws and internal procedures, the statement said creditor committee members are committed to negotiate with Ghana terms of a restructuring of their claims to be finalized in a Memorandum of Understanding (MoU), in accordance with the “Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI)”.
The creditor committee stressed that Ghana is expected to seek from all private creditors and other official bilateral creditors debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle.
Consequently, the creditor committee urges private creditors and other official bilateral creditors to commit without delay to negotiate with Ghana such debt treatments that are crucial to ensure the full effectiveness of the debt treatment for Ghana under the Common Framework.
Reacting to the news, Managing Director of IMF, Ms. Kristalina Georgieva, in a statement said “I welcome the statement from the Official Creditor Committee for Ghana on the importance of an IMF-supported economic programme, together with its commitment to negotiate debt restructuring terms accordingly”.
She said the Paris Club statement provides the necessary financing assurances for the IMF Executive Board to consider the proposed Fund-supported programme and unlock much needed financing from Ghana’s development partners.
She strongly endorsed the call by the Official Creditor Committee for private creditors and other official bilateral creditors to commit to comparable debt treatments.
“The Creditor Committee’s action recognizes the Ghanaian authorities’ strong reform program, which aims to restore macroeconomic stability and debt sustainability while laying the foundation for an inclusive recovery.
“It also signals that further progress is being made under the G20 Common Framework, demonstrating that international partners are ready to work together to help countries resolve their debt issues. This is vital to enable countries such as Ghana achieve sustainable growth and poverty reduction.”
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