IMF tells external creditors to support Ghana
Government says it is confident of getting financing assurances from its external creditors in a short time to secure a Management Board approval from the International Monetary Fund (IMF).
Restoring debt sustainability
This follows successful talks with China and Paris Clubs with a call by the International Monetary Fund (IMF) asking all bilateral creditors to support Ghana’s efforts to restore debt sustainability, as the country works towards presenting its economic programme for IMF Executive Board approval.
Positive and encouraging meetings in China
“So far had very positive and encouraging meetings in China,” the Ministry of Finance said in a Tweet on Friday.
Outstanding domestic revenue bills
“Looking forward to securing external assurances very soon, even as we pass our outstanding domestic revenue bills back home. Great progress on all fronts,” the Tweet added.
Director of Communications at the IMF, Julie Kozack, stressed the importance of Ghana securing financing assurances from partners and creditors, as a necessary step towards the presentation of its programme $3 billion request to the IMF’s Executive Board for approval.
“We’re calling on bilateral creditors to support Ghana’s effort to restore debt sustainability, form an official creditor committee, and deliver the necessary financing assurances as soon as possible,” Madam Kozack said at a news conference in Washington DC in the United States of America.
“While the IMF is engaging the Ghanaian authorities on the progress made on its request, the Fund is also seeking the assurances from Ghana’s partners,” she added.
Objectives of IMF prograame
The $3 billion IMF programme aims to support common efforts to restore macroeconomic stability, debt sustainability, while also protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive growth.
5 agreed Prior Actions
Out of the five agreed Prior Actions in the Staff Level Agreement government has already completed three.
3 agreed Prior Actions fulfilled
These are tariff adjustment by the Public Utilities Regulatory Commission (PURC), Publication of the Auditor-General’s Report on COVID-19 spending, as well as onboarding of Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF) and Road Fund on the Ghana integrated financial management information system (GIFMIS).
The fourth is the passage of the Income Tax (Amendment) Bill, Excise Duty and Excise Tax Stamp (Amendment) Bills which parliament is expected to do this week.
GH₵83 billion DDEP completed
A Domestic Debt Exchange Programme (DDEP) swapped a total of GH₵83 billion worth of old bonds for new ones with the expectation of finishing similar exercise with its external creditors made up of bilateral partners and Eurobond investors.
IMF MD happy with progress
Managing Director of the IMF, Kristalina Georgieva, had said the Fund was happy with Ghana’s progress to present its SLA for the Fund’s review and approval.
Last week, China’s Foreign Ministry Spokesperson Wang Wenbin has stated that China attaches great importance to resolving Ghana’s debt issues and understands the difficulties facing the country at the moment.
“We would like to enhance communication with Ghana to work out a proper settlement through consultation,” he said.
Joint efforts of international partners required to resolve debt issues
He pointed out that properly resolving the issues concerning Ghana’s debt requires the joint efforts of Ghana and all international partners.
Regular Press Conference
Wenbin made the remark a Regular Press Conference held on March 22, 2023, in response to a question on Ghana’s finance minister visiting Beijing for a proposed restructuring of Ghana’s debt.
Ghana-China meeting confirmed
Wenbin confirmed a planned meeting between a high powered Ghanaian delegation led by Finance Minister Ken Ofori-Atta and officials of competent departments of China on bilateral cooperation in relevant areas.
Institutions the delegation will meet
The delegation is expected to hold discussions with officials of the Finance Ministry of China, Central Bank of China, and China’s Eximbank, principally over how to cross the debt restructuring line with China, ideally as part of the common framework with the Paris Club.
Key stakeholders in debt relief efforts
Wenbin stated that China always believes that multilateral financial institutions and commercial lenders, who are the main creditors for developing countries, need to participate in developing countries’ debt relief efforts.
China’s loans account for less than 5% of Ghana’s total public debt
He stressed that official bilateral loans related to China only account for less than five percent of Ghana’s external debt.
$54bn total public debt stock
Ghana’s total public debt stock stands at $54 billion, out of which $28 billion is owed to foreign creditors.
Ghana owes China $1.9bn
Out of Ghana’s $8.5 billion bilateral loans, about $1.9 billion is owed to China.
Important cooperation partner in Africa
Wenbin described Ghana as China’s important cooperation partner in Africa.
Cooperation yielded tangible benefits to both sides
According to him, in recent years, practical cooperation between the two countries has yielded fruitful outcomes and brought tangible benefits to both sides.
Chinese Delegation visited Ghana earlier
In the first week of March this year, a Chinese Delegation was in Ghana for a 3-Day mission to engage the Government of Ghana, following a request for the restructuring of Ghana’s $1.9 billion debt owed to China.
Delegation examined indebtedness to China
The meeting between officials of the Ministry of Finance and their counterparts from China examined Ghana’s indebtedness to China and the possible ways the Asian giant can support the government’s external debt restructuring – a precursor to a bailout from the IMF to resuscitate the economy.
There was data sharing between the two governments, with discussions being held at the technical level, on the parameters of an effective debt treatment.
Ghana’s planned Mission to China
The team visited ahead of Ghana’s planned Mission to China, all in line with ongoing negotiations for a sovereign debt treatment.
Ghana seeking extension of maturities, debt servicing, lower interest rates
Information indicates that Ghana seeking among other reliefs, an extension of the moratorium on debt servicing; an extension of maturities; and lower interest rates.
$3bn staff-level agreement reached in December 2022
In December 2022, the government reached a staff-level agreement with the fund and is now left with board-level approval before it can access the $3 billion support.
Restructuring of domestic and external debt
However, the board-level approval is hinged on the country’s ability to restructure its domestic and external debt.
China remains a key partner for Ghana and it has consistently been a crucial part of the country’s socioeconomic development.
China had supported the country through vital projects that spurred growth and job creation nationwide.
The Chinese delegation, as part of the 3-day Mission met with the Vice-President, Alhaji Dr Mahamudu Bawumia, the Minister for Finance, Mr Ken Ofori-Atta, and technical teams from the Ministry of Finance.
The Chinese Ambassador to Ghana, Mr Lu Kun, also hosted the delegation at a luncheon yesterday.
In attendance were members of the Chinese delegation, the Minister for Finance, Mr Ken Ofori-Atta; Minister of Foreign Affairs, Ms Shirley Ayorkor Botchwey; Ghana’s Ambassador to China, Dr Winfred Nii Okai Hammond, and officials of the Ministry of Finance.
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