Ghana Achieves Four-Year Interest Freeze in Bilateral Debt Agreement with Official Creditor Committee
Francis Kyei, Senior Market Analyst
- Official Creditor Committee agrees to a 4-year debt suspension, 2-3% interest from the fifth year of Ghana’s loan repayment, with room for further negotiations.
- IMF Executive Board to review Ghana’s programme this Friday, after bilateral debt restructuring agreement.
- The agreement is set to provide Ghana with immediate financing of approximately US$1.15 billion.
The Executive Board of the International Monetary Fund (IMF) is scheduled to assess Ghana’s IMF program this Friday, January 19. This review comes in the wake of an accord reached by the nation’s bilateral creditors regarding the principal terms for reorganising Ghana’s $5.4 billion bilateral debt. A key element of this agreement is the suspension of interest payments for a period of four years.
Today, a confidential source within Ghana’s Ministry of Finance informed GFX that in addition to the agreed four-year suspension of interest payments, the Official Creditor Committee (OCC), led by China and France, has agreed to set interest rates between 2% to 3%. This new interest rate arrangement will take effect starting from the fifth year of Ghana’s loan repayment schedule.
While Ghana views this preliminary agreement as a significant stride, the source said there’s still room for further negotiations for more favourable terms once direct discussions with the countries commence.
During the weekend, Ghana’s Finance Minister, Ken Ofori-Atta, took to social media to express his enthusiasm over this recent progress. He highlighted that the agreement with the OCC is expected to promptly release around US$1.15 billion in funding.
This substantial amount includes the second tranche of $600 million from the IMF programme, an additional $300 million from the World Bank’s Development Policy Operations (DPO), and $250 million earmarked for Ghana’s Financial Stability Fund, also provided by the World Bank.
Following the announcement of an agreement between Ghana and the OCC under the Group of 20 framework, Ms. Kristalina Georgieva, Managing Director of the IMF, extended her gratitude to the OCC for their supportive role.
“This is another significant milestone for the G20 Common Framework, under which G20 creditors have collaborated to agree on debt relief for Ghana. This agreement clears the way for the IMF Executive Board to consider the first review of Ghana’s three-year Extended Credit Facility Arrangement in the coming days. I look forward to our continued productive collaboration with Ghana,” said Georgieva.
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