Ghana official creditors agree on restructuring date, key step to deal—sources

Ghana’s official creditors have agreed to restructure debts that were extended to the country up until December 2022, two sources told Reuters, with Accra closing in on a key step required to advance its restructuring. A deal between Ghana and its official creditors would pave the way for the Executive Board of the International Monetary Fund (IMF) to approve the disbursement of $600 million under its $3 billion bailout programme. Discussions over the “cut-off date” – the date after which new loans signed with bilateral creditors will not be restructured – had recently emerged as a stumbling block to an agreement. Bilateral lenders, including China and France who co-chair the Official Creditor Committee (OCC), hold around a quarter of Ghana’s $20 billion external debt earmarked for restructuring.

Some creditors were said to prefer Dec. 31, 2022, as a cut-off date, with Ghana having defaulted earlier that month, while others had pushed for March 24, 2020, when the Group of 20 introduced its debt service suspension initiative (DSSI) to help the world’s poorest countries cope with the fallout of the COVID crisis. Ghana did not participate in the DSSI. Another source familiar with the situation said the difference in debt service for Ghana if the earlier date of March 2020 would have been chosen was in the magnitude of a few hundred million dollar – or a “significant amount”. Ghana’s finance ministry declined to comment. China’s central bank, finance ministry and the Export-Import Bank of China did not immediately respond to requests for comment.

Ghana still needs to formally accept the proposal. One of the sources said the OCC plan foresaw no reduction to principal and interest rates overall, but that Ghana would not pay either for the next four years with payments set to resume thereafter. Following their meeting on Monday, official creditors had shared the term sheet of their proposal with Ghana, according to media reports and sources. Speaking about a possible deal with official creditors, Finance Minister Ken Ofori-Atta told Bloomberg he hoped to finish reviewing the draft term sheet by Friday and that “in terms of the broad framework, all parties are in agreement”, which he said would allow the IMF to sign off on the disbursement.