Ghana seeks exemption for Afreximbank loans in external debt restructuring

Finance Minister, Ken Ofori-Atta, has announced the country's intention to exempt loans obtained from the African Export & Import Bank (Afreximbank) from being restructured.

This comes as Ghana aims to renegotiate terms on its $20 billion external debt and recover from a severe economic crisis.

To qualify for the next installment of a $3 billion loan deal from the International Monetary Fund (IMF), Ghana aims to reduce its external debt repayments by $10.5 billion over the next three years. Ofori-Atta expressed the difficulty of this task but emphasized the importance of finding a solution, highlighting the crucial support provided by Afreximbank during Ghana's most challenging period.

Last year, Ghana secured a $750 million loan from Afreximbank when it faced restricted access to global capital markets due to soaring yields on its international bonds, credit rating downgrades, and currency depreciation.

Afreximbank has argued that it should be considered a multilateral development lender, and therefore its loans should not be subject to debt restructuring. According to the treaty establishing the bank, which Ghana has ratified, all member countries are prohibited from imposing moratoriums or restructuring on Afreximbank loans.

Ghana's debts to countries such as China and members of the Paris Club accounted for $5.4 billion of the $20 billion external debt earmarked for restructuring, as of the end of 2022. The total external debt stock stood at approximately $30 billion.

Ofori-Atta stated that Ghana aims to reach agreements with bilateral creditors in the coming weeks. The details concerning the treatment of Afreximbank loans will be addressed in negotiations within the creditor committee.

The loan Ghana received from Afreximbank last year consisted of a seven-year tranche split into €100 million ($109.3 million) at an interest rate of 6.49%, including fees, and $101 million at 9.55%. Additionally, a second tranche of $350 million with a term of 10 years carried an interest rate of 9.33%.

As Ghana navigates its external debt restructuring, the exemption of Afreximbank loans remains a key consideration in the country's efforts to stabilize its financial situation and pursue economic recovery.

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