Ghana is set to request a debt relief via the G20 Common Framework programme, despite only poor nations eligible for it.
According to Reuters, the country has sought reassurances that the negotiations can be expedited before proceeding.
It said Ghana had reached out to the Paris Club of creditor countries in December 2022 to ask for assurances that the Common Framework process, set up by the Group of 20 leading economies in 2020 in response to COVID-19, could be expedited.
If the assurances are favourable, the government would quickly sign onto the Common Framework, Reuters source revealed on condition of anonymity.
A Paris Club official told Reuters that the group had received a letter from Ghana’s government, but declined to give further detail.
Another source with knowledge of Ghana’s debt restructuring said it was hard to see any other outcome for Ghana than signing up to the Common Framework as they have left themselves no other options.
A third source, Reuters said, who is familiar with the thinking of the IMF, said Ghana going through the Common Framework programme was under discussion and the most probable outcome, as well as the preferred option for the Paris Club.
Only poorer nations are eligible to request a Common Framework programme. This then lead to an official creditor committee convened and negotiations supported by the International Monetary Fund and the World Bank.
On the other hand, a country aiming to restructure its debt can also do so by negotiating individually with each creditor.
The Common Framework, designed to allow for speedy debt reworks, has been widely criticised for its glacial progress.
Chad, Ethiopia and Zambia signed up in early 2021. While Chad secured a deal with creditors in November, Zambia is still locked in talks. Ethiopia’s progress was held up by civil war.
Ghana’s public debt hits ¢467.4bn in September 2022
Ghana’s public debt stock hit ¢467.4 billion ($47.7 billion) in September 2022, of which about $4 billion was bilateral. $1.9 billion was held by Paris Club countries and $1.7 billion by China.
President Akufo-Addo in July 2022 directed the Finance Minister, Ken Ofori-Atta, to begin formal engagements with the IMF for a Fund-support.
A statement signed by the Information Minister, Kojo Oppong Nkrumah, and dated July 1, 2022 indicated that there had already been a conversation between the IMF boss, Kristalina Georgieva and President Akufo-Addo, conveying the government’s decision to engage the Fund.
The IMF-support programme will inject $3 billion into the country’s economy as balance of payment support.
Ghana must restructure its debt to get the final approval to access the IMF funds.
In December 2022, Finance Minister, Ken Ofori-Atta launched a domestic debt exchange and later said it would default on nearly all of its $28.4 billion of external debts.