Ghana Receives Debt-Relief Terms; IMF Optimistic About $600M Disbursement

Francis Kyei, Senior Market Analyst

• Ghana has secured debt-relief terms from its bilateral creditors, resulting in a positive outlook from the IMF for a second tranche of $600 million.

• The IMF is optimistic for Ghana’s negotiations with its creditors, yet there is rising criticism surrounding the IMF agreement.

• The success of the restructuring process is vital for achieving a debt-to-GDP ratio of 55% by 2028.

Ghana has effectively negotiated debt-relief terms with its bilateral creditors, fostering confidence from the International Monetary Fund (IMF) regarding the forthcoming disbursement of an additional $600 million tranche.

Julie Kozack, the Director of Communications at the IMF, expressed confidence in the progress made in the talks between Ghana and its bilateral creditors during a press conference yesterday.

“Good progress is being made and we are confident that an agreement can be reached soon so that we can rapidly bring the programme to our board,” said Kozack, in response to a question from GFX on the state of Ghana’s second tranche under the programme, and the outlook for Ghana.

Ghana finds itself in a precarious position, grappling with the dual challenge of restructuring its current debt and acquiring new funding to address its fiscal difficulties. This strategy, especially the involvement with the IMF program, has been met with scepticism and criticism from several economists and analysts, who doubt its advantages for the nation.

One prominent detractor is Prof. Steve Hanke, a respected Professor of Economics at Johns Hopkins University in the U.S. He has openly expressed his disapproval of Ghana’s deal with the IMF, taking to social media to liken the agreement to “making a deal with the devil,” – as Accra once more turns to the IMF to provide succour after poor financial management.

Yet the successful restructuring is a crucial step towards achieving a debt-to-GDP ratio target of 55% by 2028.

An insider from Ghana’s Finance Ministry told GFX that the IMF Executive Board is set to convene in the coming days to finalise the review of Ghana’s IMF programme.

The source emphasised Ghana’s urgent need for the support of the fund and its creditors to execute its 2024 budget, as this coming December 2024 general election looms in the distance.

Ghana’s approach to restructuring its debt revolves around securing terms that substantially lower the net present value of its future repayments, a strategic shift aimed at easing the fiscal burden compared to prior agreements.

This nuanced manoeuvre is expected to pave the way for smoother individual negotiations with each creditor nation, once a collective consensus on the bilateral debt restructuring framework is achieved. The source expressed confidence that these discussions would proceed with a blend of diplomatic acumen and pragmatic efficiency.

Disclaimer: This article has been prepared by GFX Brokers, an African investment firm with its registered office on the 2nd Floor, PWC Towers, Cantonments City, Accra Ghana. This article has been issued for information purposes only. GFX Brokers does not recommend or propose that any security referred to in this article is appropriate or suitable for your investment objectives or financial needs