Ghana to finally get IMF Board approval for $3b facility after Creditors Committee support
It’s been nearly five months since Ghana reached IMF staff level agreement for a $3 billion facility to take the country out of the current economic crisis, largely induced by excessive borrowing and mismanagement.
The country reached the staff level agreement in December 2022, but the facility hasn’t been approved by the Board because the country has not satisfied conditions required for Board approval, but this week, some good fortune smiled on the country when the Creditors Committee supported the country’s request for help.
The creditor committee for Ghana is formed by countries with eligible claims on Ghana, which was formally established on May 12, 2023, and co-chaired by China and France.
The committee after examining the macroeconomic and financial situation of Ghana, including its long-term debt sustainability, and its formal request for a debt treatment under the “Common Framework for Debt Treatments beyond the DSSI” endorsed under the Saudi G20 Presidency in November 2020, which was also endorsed by the Paris Club, gave its support to 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.
“The creditor committee encourages Multilateral Development Banks (MDBs) to maximize their support for Ghana to meet its long-term financial needs..,” the Committee said in a statement.
According to the statement, consistent with their national laws and internal procedures, creditor committee members are committed to negotiate with the Republic of Ghana terms of a restructuring of their claims to be finalized in a Memorandum of Understanding (MoU), in accordance with the “Common Framework for Debt Treatments beyond the DSSI”.
“The creditor committee stresses that the Ghanaian authorities are expected to seek from all private creditors and other official bilateral creditors debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle. Consequently, the creditor committee urges private creditors and other official bilateral creditors to commit without delay to negotiate with Ghana such debt treatments that are crucial to ensure the full effectiveness of the debt treatment for Ghana under the Common Framework,” it added.
In response, the IMF Managing Director, Kristalina Georgieva applauded the statement saying: “I welcome the statement from the Official Creditor Committee for Ghana on the importance of an IMF-supported economic programme, together with its commitment to negotiate debt restructuring terms accordingly. This statement provides the necessary financing assurances for the IMF Executive Board to consider the proposed Fund-supported program 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.
“The Creditor Committee’s action recognizes the Ghanaian authorities’ strong reform program, which aims to restore macroeconomic stability and debt sustainability while laying the foundation for an inclusive recovery. It also signals that further progress is being made under the G20 Common Framework, demonstrating that international partners are ready to work together to help countries resolve their debt issues. This is vital to enable countries such as Ghana achieve sustainable growth and poverty reduction.”
The Committees support effectively, would speed up the IMF Board decision to approve the country’s request for financial support to save a crashed economy.
By Emmanuel K Dogbevi
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