According to Reuters, the government of Ghana has submitted a proposal outlining the restructuring of its external debt to its official creditors.
This move by the government can be interpreted as a crucial step towards engaging the Official Creditor Committee, which includes the recently formed Paris Club, to evaluate the country’s debt restructuring program. It marks the initiation of a more intricate negotiation process, where multiple proposals are expected to be exchanged between the parties involved.
It is reported that the ‘working proposal’ is however not legally binding.
The Common Framework process was set up by the G20 in 2020 to bring China and other newer creditor nations into joint sovereign debt restructuring negotiations, for its external debt rework.
Ghana is hoping to cut about $10 billion out of a total of $52 billion over the next three years to successfully implement the International Monetary Fund programme.
The country’s debt to China and members of the Paris Club is estimated at $5.4 billion. As of December 2022, the total external debt stood at $28.9 billion.
It has already completed a Domestic Debt Exchange Programme in February 2023 in which about 65% of bondholders took part in the exercise.