Ghana has signed a memorandum of understanding (MoU) with its bilateral creditors; China and France, to restructure $5.4 billion of debt. This move marks an important step in acquiring $360 million from the International Monetary Fund (IMF) within Ghana’s $3 billion bailout programme, anticipated to materialise next month.
The MoU lays out a blueprint for restructuring loans from official creditors, following an agreement reached by the Paris Club in January.
During the pandemic, Ghana defaulted on the majority of its $30 billion external debt. Subsequently, the inflation rate has plummeted from 54.1% in December 2022 to 25% in April 2024, while GDP growth surged to 2.9% in 2023.
Labelling Ghana’s debt as unsustainable, the IMF aims to slash the public debt-to-GDP ratio from 88.1% in 2022 to 55% by 2028. Terms established with official creditors hold paramount importance for bondholders, who advocate for fair treatment under the G20 Common Framework for debt restructuring.
Ghana successfully concluded a restructuring of its domestic debt in October, resulting in savings of 61 billion Ghanaian cedis (£8.6 billion). The government remains committed to fulfilling IMF prerequisites for its debt restructuring programme.