IMF urges swift debt agreement with bilateral creditors

The International Monetary Fund (IMF) has urged the country’s official creditors to promptly reach an agreement on debt treatment, aligning with the financing assurances provided in May 2023.

Stéphane Roudet, Mission Chief for Ghana, made this appeal as part of a broader effort to secure essential financial support to sustain the economic recovery process.

Stressing the situation’s urgency, Mr. Roudet emphasised that: “We urge official creditors to proceed and agree on an appropriate debt treatment in line with the financing assurances they provided in May 2023”.

This call follows the IMF’s achievement of a Staff-Level Agreement on the First Review of the Extended Credit Facility (ECF) and discussions on the 2023 Article IV Consultation with Ghana. The country’s access to approximately US$600million in financing hinges on official creditors swiftly reaching an agreement on debt treatment, pending approval by IMF management and the Executive Board.

Ghana’s commendable performance under the Fund-supported programme has laid a strong foundation for ongoing recovery efforts. Now, the crucial step is securing an agreement with official creditors that aligns with the IMF Executive Board-approved programme parameters and debt targets.

Mr. Roudet reiterated this need, stating: “In light of Ghana’s compelling performance under the Fund-supported programme, the critical next step is to secure an agreement with official creditors on the terms of a debt treatment consistent with the IMF Executive Board-approved programme parameters and debt targets”.

In response to an acute economic and financial crisis, authorities have undertaken significant measures – including macroeconomic policy adjustments, successful domestic debt restructuring, and extensive reforms. These actions are yielding positive results, with growth in 2023 surpassing expectations, inflation decreasing and fiscal and external positions improving.

Ghana’s commitment to fiscal responsibility is evident as it strives to lower the fiscal primary deficit by about 4 percentage points of GDP in 2023. Spending remains within programme limits, and social protection programmes have been expanded to support vulnerable populations during the crisis.

On the revenue front, Ghana has met its non-oil revenue mobilisation target – showcasing the success of structural fiscal reforms.

Overall, strong policies and reforms are beginning to stabilise the economy; offering hope for a brighter future.

The Fund, on May 17, 2023, approved special drawing rights of 2.242 billion equivalent to US$3billion for Ghana.

Ghana received the first US$600million tranche of the US$3billion loan last May.

The decision was reached five days after the formal announcement of an Official Creditors Committee (OCC) instituted by the Paris Club and headed by China and France. The formation of this committee paved the way for the IMF funds. The loan agreement, which was reached at the staff-level last December, attained board-level approval in record time.