Ghana’s Debt Deal Stalled by China-Paris Club
Rift, IMF Funds on Hold

Francis Kyei, Senior Market Analyst, GFX Brokers

• China and the Official Creditor Committee, including the Paris Club, are stalling Ghana’s access to $600 million from the IMF’s Extended Credit Facility.

• The key issue in debt restructuring negotiations is the cut-off date, with the Paris Club favouring pre-March 2020 projects and China advocating for a later date.

• Resolving these disputes is vital for Ghana to access essential funds for economic recovery from the IMF’s $3 billion Extended Credit Facility.

In an exclusive discussion with GFX today, a well-informed source from Ghana’s Ministry of Finance revealed significant challenges in the nation’s quest for an additional $600 million tranche, from a $3 billion IMF loan. The primary roadblock stems from disagreements over bilateral debt restructuring terms, involving a dispute between China and the Official Creditor Committee, which includes the Paris Club.

The main contention centres on the cut-off date for debt restructuring. GFX’s source said that the Paris Club advocates for considering only projects and loans signed before March 2020, in accordance with the G20’s debt relief initiative. This approach would consequently exclude debts incurred post that date.

China, as Ghana’s largest bilateral creditor, counters with a push for a later cut-off date, aligned with Ghana’s debt restructuring application in February 2023. Their stance is driven by concerns that the earlier date proposed would exclude a considerable portion of its loans, raising issues of fairness.

There’s broad agreement on the overall structure of debt restructuring and the scope of reductions, but the determination of a cut-off date remains a central issue.

The Ministry of Finance, however, is optimistic about resolving this soon, which would enable the IMF Executive Board to assess Ghana’s situation and release the subsequent tranche of funding.

In contrast, on November 17th, Finance Minister Ken Ofori Atta indicated to Parliament an expectation to finalise a deal by the end of November, with an IMF board meeting projected for December. The absence of an announcement to date, however, casts doubt on the timeline for concluding these negotiations.

Ghana is navigating complex talks with bondholder committees, guided by its advisors at

Lazard. The principal challenge lies in crafting an offer that adheres to comparability rules,

ensuring uniformity in terms extended to all creditors.

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