Ghana secures financing assurances to pave way for US$3bn IMF loan approval

Ghana has received the needed financial assurances from the Paris Club – official Creditors Committee, chaired by China and France, paving the way for the Board of the International Monetary Fund (IMF) to consider approving the country’s $3 billion loan-support programme.

The Creditors Committee formally established on May 12, 2023, will negotiate with the Government on the terms of a restructuring of their claims to be finalised in a Memorandum of Understanding (MoU).

This is in accordance with the Common

Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI) – an initiative for some 73 low- and lower-middle-income countries to temporarily ease the financing constraints and free up scarce money.

The Committee have since urged private creditors and other official bilateral creditors “to commit without delay to negotiate with Ghana such debt treatments.”

That, they said, was crucial to ensure the full effectiveness of the debt treatment for Ghana under the Common Framework, and encouraged Multilateral Development Banks (MDBs) to maximise their support for Ghana to meet its long-term financial needs.

The Committee said it supports Ghana’s envisaged IMF upper credit tranche (UCT) programme and its swift adoption by the IMF Executive Board to address Ghana’s urgent financing needs.

Ms Kristalina Georgieva, Managing Director, IMF, said the move by the Creditors Committee “provides the necessary financing assurances for the IMF Executive Board to consider the proposed Fund-supported programme and unlock much-needed financing from Ghana’s development partners.”

“I also strongly endorse the call by the Official Creditor Committee for private creditors and other official bilateral creditors to commit to comparable debt treatments,” she said.

Ms Georgieva also noted that the assurances from the Creditors Committee signalled that further progress had been made under the G20 Common Framework, demonstrating that international partners were ready to work together to help countries, including Ghana resolve their debt issues.

“This is vital to enable countries such as Ghana to achieve sustainable growth and poverty reduction,” the MD of the IMF said.

“The Paris Club has today established the OCC (co-chaired by China & France). With the granting of Financing Assurances, Ghana is now ready to go to the IMF Board. Thank you to all our bilateral partners for helping us reach this significant milestone!” the Ministry of Finance said in a tweet.

On December 12, 2022, the IMF reached a staff-level agreement with the Ghanaian authorities on a new arrangement under the Extended Credit Facility.

The Board’s consideration of Ghana’s programme request has been pending financing assurances from Ghana’s official bilateral creditors, with the recent move at the Spring Meetings, where Ghanaian authorities engaged the external creditors.

The three-year loan support programme is to make Ghana’s debt more sustainable, restore financial stability and cushion the populace who are most at risk from rising prices of goods and services and other economic challenges.