According to Finance Minister Ken Ofori-Atta, Ghana has received a draft term sheet on debt relief from its official creditors that is sufficient for the International Monetary Fund to disburse $600 million to the West African nation.
The comprehensive term sheet has been submitted by the Paris Club Group of creditors, alongside new contributors such as China. These proposals follow months of extensive negotiations aimed at restructuring a substantial portion of Ghana’s bilateral debt, which totals as much as $5.4 billion.
Speaking in an interview in the capital city, Accra, Finance Minister Ofori-Atta acknowledged the ongoing review of the draft term sheet. While refraining from disclosing specific details of the accord, he expressed optimism, stating, “We need to scrutinize every clause, but in terms of the broad framework, all parties are in agreement so it’s kind of a clearance to the fund.”
He added, “I’m hoping by tomorrow we would have finished so that whatever needs to be done will be sent to the fund.”
Ghana initiated the restructuring of its public debt in December 2022 to qualify for a $3 billion extended credit facility program with the IMF. In May, the country received an upfront disbursement of $600 million when it committed to the program. However, further disbursements are contingent upon meeting debt-rework and other performance targets.
Ongoing discussions between Ghana and the official creditor committee are reportedly making good progress, according to IMF spokeswoman Julie Kozack, who addressed reporters on Thursday. Kozack expressed confidence that an agreement between the parties can be reached soon.
Ghana’s public debt, excluding loans to state-owned enterprises, saw a notable reduction to 66.4% of gross domestic product by the end of September. This was facilitated by the completion of a domestic debt reorganization, whereby investors experienced interest-rate cuts after swapping about 126 billion cedis ($10.5 billion) of local debt last year.
Furthermore, a memorandum of understanding with bilateral lenders could pave the way for an additional $550 million in funding from the World Bank by the end of February, as revealed by Finance Minister Ofori-Atta in a statement last week. The positive trajectory in these negotiations signals a potential turning point for Ghana’s economic outlook.
