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.

Financing assurances

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.

Bilateral creditors

“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.

Enhanced communication

“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.

Data sharing

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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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.

Enhanced communication

“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.

Data sharing

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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Elvis Darko

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For the Board of the International Monetary Fund (IMF) to approve Ghana’s $3 billion bailout at the end of this month, Ghana needs to achieve three critical milestones this week.

Ghana has started to actively engage external debtors with the view to getting debt cancellation, especially from the Paris club of creditors.

The first stop of a government delegation seeking debt restructuring will be in China as that country holds $1.7 billion out of Ghana’s $5.7 billion bilateral debt.

Delegation to China

Finance Minister, Ken Ofori-Atta left Accra yesterday leading a high-powered government delegation to China to negotiate for the acceptance of the country’s proposal for debt cancellation with the Paris club.

The delegation will hold discussions with officials of the finance ministry of China, the 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, which also includes Russia.

The Chinese who are not members of the Paris Club have so far dragged their feet.

Other non-member creditors like Saudi Arabia and India on the other hand, are expected to join the Paris Club meetings.

Delegation to meet Paris Club in France

From China, the delegation will travel to Paris in France to hold discussions with the Paris Club tomorrow, Tuesday, March 21, 2023.

That meeting is most critical in determining how quickly Ghana can secure the IMF deal.

In January, all member countries of the G20 group of economic powers said they are on board for a restructuring of Ghana’s debt and Paris Club members are ready to take the first step toward forming a creditor committee.

The work of the Committee will, typically, take about three weeks.

Tuesday’s meeting will set the ball rolling and give Ghana the greatest indication yet as to how quickly the anticipated IMF deal can be closed.

Forming a creditor committee took a couple months for previous cases, however the official said the Paris Club members were all ready to do so for Ghana and hoped it could be done in a month.

The official said Ghana’s case was less complex than Zambia, whose case the official said was progressing after struggling since it became the first African country to default after the pandemic.

The programme, which was launched in 2020, was supposed to streamline the process of coordinating among creditor governments the restructuring of low-income countries’ debts after the pandemic.

However, progress has proven glacial for the first cases; a situation Western countries say is in part due to a lack of restructuring experience by China, a non-Paris Club G20 creditor that has become a major lender in recent years.

 3 Bills Parliament must pass

On Thursday Parliament will vote on three key revenue bills which must be passed to indicate Ghana’s seriousness and doing better than being below the continental average on revenue mobilisation.

The bills are the Income Tax (Amendment) Bill, the Excise Duty & Excise Tax Stamp (Amendment) Bills and the Growth and Sustainability Levy Bill.

The passage of these bills and a successful meeting with the Paris Club are the most crucial things the IMF Board will require to approval the deal for Ghana.

Ghanaians now can only wait and see the timetable to be set by the 22-member nations Paris Club, which holds majority of the country’s bilateral debts.

But, Ghanaian officials have been having prior engagements with the creditor nations involved, why should all help speed up the process.

Ghana hopes Ofori-Atta’s trip can help get China to join the Paris Club meetings, which will agree on a common framework for all its member creditors, including Belgium, UK, USA, Japan, Denmark and the Netherlands.

Alternatively, failing which, Ghana can do a separate bilateral deal with China, but on similar principles of restructuring. That is also at the heart of the Ghanaian delegation’s business in China this week. The team should return next Sunday.

Parliamentary action

The nation’s fate after the successful implementation of the Domestic Debt Exchange Programme is also now heavily dependent on Parliament who meet this Thursday 23 March to vote on the three revenue bills.

Members of Parliament from the National Democratic Congress caucus have been directed by the NDC secretariat to vote against the three bills.

Minority Leader, Cassiel Ato Forson last week  suggested that the seeming delay in agreeing on a debt restructuring deal with China is what could kill the IMF deal but was silent on the bills the House is required to pass.

The China factor

Ofori-Atta who left Accra Sunday afternoon will first stop over in Addis Ababa, Ethiopia, to attend the African Finance Ministers’ meeting, which will revolve around the continent’s suffocating debts.

He will meet United Nations Economic Commission for Africa (UNECA) as well, again on concerns over Africa’s growing indebtedness, especially since Covid-19.

Negotiation with external creditors

Negotiations with Eurobond holders are said to have been significantly smoothened since the successful completion of the Domestic Debt Exchange Programme (DDEP) and   in principle, a  framework of a deal with holders of  Eurobond has been fashioned out.

Ghanaian officials have met with all executive directors of the IMF, including Germany, the United Kingdom, France, Japan, and the USA.

Ghana will most likely be looking after the Spring Meetings of the IMF and World Bank in Washington DC, which will take place from April 10 to 16 2023, for the IMF Executive Board.

The IMF and Ghana reached a staff-level agreement on the U$3 billion loan deal in December 2022. Ghana was expected to conclude its domestic debt restructuring by end of January but that was also delayed due to an understandable struggle with bondholders and their representatives on the nature, structure and scope of the domestic debt exchange exercise.

The decision by the Paris Club to only now meet on Ghana has also meant that the IMF deal will have to wait for the work of the Paris Club’s Creditors Committee to be completed on the common framework first.

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Elvis Darko

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• VALCO workers asking for dollar indexed salaries untenable – 4 November 2022
• 2022 Fuel price increases: Petrol-94%, diesel-136% in 10 months – 19 October 2022
• Coalition: New producer price too low, it will kill  cocoa industry – 18 October 2022