Debt restructuring to revive stalled projects – Akufo-Addo announces

President Nana Addo Dankwa Akufo-Addo has announced that many of the country’s stalled projects will soon resume, thanks to successful negotiations on the restructuring of Ghana’s debt.

Speaking at the presentation of credentials to nine newly appointed diplomats at the Jubilee House, the President detailed the positive outcomes of these negotiations and their implications for Ghana’s development.

The President outlined the completion of three major debt restructuring operations: domestic debt restructuring, external bilateral debt restructuring, and commercial bondholders debt restructuring.

These efforts have provided much-needed financial relief and set the stage for a renewed focus on critical infrastructure and development projects.

“These agreements have provided much-needed breathing space and put our domestic debt-to-GDP ratio on a clear downward trend,” President Akufo-Addo explained.

“The successful negotiations mean that bondholders will provide $4.4 billion in cash flow relief during the IMF Programme, in addition to the cancellation of $4.7 billion of the debt stock.”

The President highlighted the significance of the domestic debt restructuring, which achieved a high participation rate of almost 95%. Coupon rates were reduced from 21% to 9% on average, and maturities were extended, easing the near-term local debt service burden that previously consumed more than 40% of the country’s tax revenues.

This restructuring has set the domestic debt-to-GDP ratio on a path to reach 55% by the end of 2028. Furthermore, the external bilateral debt restructuring has been a crucial milestone in Ghana’s economic recovery efforts.

The agreement with bilateral creditors, coordinated through the Ghana Official Creditor Committee (OCC) and co-chaired by France and China, resulted in the restructuring of $5.1 billion of Ghana’s debts.

This agreement is expected to provide a cash flow relief of approximately $2.8 billion, or GH¢39 billion, in debt service, postponed between 2023 and 2026 to be repaid later at a cheaper interest rate.

“The Agreement with our Bilateral Debt Holders will lead to a cash flow relief of around $2.8 billion or GH¢39 billion in debt service,” President Akufo-Addo stated. “This will enable us to resume and complete many projects that are vital for our nation’s progress.”

The successful negotiations have also paved the way for the IMF’s Executive Board to convene and approve Ghana’s Second Review of the Fund Programme, resulting in a further disbursement of $360 million in support of the programme. This additional funding will further bolster Ghana’s efforts to revive its economy and accelerate development initiatives.

One of the most notable achievements in the debt restructuring process is the agreement with commercial bondholders. The restructuring of $13.1 billion of debts resulted in significant savings for the government, including the cancellation of $4.7 billion, or GH¢65 billion, from the debt stock. Additionally, Ghana will save $4.4 billion, or GH¢60 billion, in debt service, providing further financial relief during the IMF Programme.

“The savings include the cancellation of $4.7 billion from the debt stock and $4.4 billion in cash flow relief during the IMF Programme,” President Akufo-Addo explained. “This comprises principal savings of $1.5 billion and interest savings of $2.9 billion.”

The President commended the Ministry of Finance, led by Hon. Mohammed Amin Adam, for their efforts in achieving these historic agreements. He emphasized the importance of these milestones in creating the financial space needed to resume and complete stalled projects across the country.

“These achievements are unprecedented in the history of country debt restructurings,” President Akufo-Addo stated. “The Minister for Finance and his team at the Ministry of Finance are to be warmly applauded for this historic achievement.”

With the successful debt restructuring initiatives in place, the government is now well-positioned to focus on revitalizing critical infrastructure and development projects that have been stalled due to financial constraints. These projects, which include improvements in healthcare, education, transportation, and other essential sectors, are vital for Ghana’s progress and development.

The President’s announcement has been met with optimism and renewed hope for Ghana’s economic future. The resumption of stalled projects will not only boost the country’s development efforts but also create jobs and improve the quality of life for Ghanaians.

As Ghana continues on its path to economic recovery, the successful debt restructuring and the resumption of stalled projects signify a significant step forward in the nation’s journey towards sustainable growth and prosperity.