Ghana Signs MoU to Restructure $5.4 Billion Debt Amid IMF Bailout Programs
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Ghana has reached a significant milestone by signing a Memorandum of Understanding (MoU) with its key bilateral creditors, including China and France, to restructure $5.4 billion of its debt. This agreement is critical in helping Ghana secure a $360 million disbursement from the International Monetary Fund (IMF) as part of its broader $3 billion bailout program, which is expected to move forward next month.
The MoU provides a framework for renegotiating loans with official creditors, following the Paris Club’s agreement in January to address Ghana’s debt challenges. This debt restructuring is essential for the country, which defaulted on most of its $30 billion external debt during the pandemic.
Since then, Ghana has made considerable progress in stabilizing its economy. Inflation, which soared to 54.1% in December 2022, has dropped to 25% by April 2024, and the country achieved a GDP growth rate of 2.9% in 2023.
The IMF has labelled Ghana’s debt as unsustainable and aims to bring down the public debt-to-GDP ratio from 88.1% in 2022 to a target of 55% by 2028. The terms agreed with official creditors will be crucial to addressing the concerns of bondholders seeking equitable treatment under the G20 Common Framework for debt restructuring.
Earlier, in October, Ghana successfully completed a domestic debt restructuring, saving 61 billion Ghanaian cedis ($17.5 billion). The government continues to work toward meeting IMF conditions to ensure progress in its broader debt restructuring program. This is seen as a necessary step in reviving the economy and restoring investor confidence.
