Ghana’s Proposed Debt Restructuring in 2023 … IMF Confirms Country’s Intention

The International Monetary Fund (IMF) has confirmed that government of Ghana has declared its intention to conduct a debt restructuring in 2023.

A notice posted on the fund’s website said the Ghanaian authorities “Have assessed their public debt as being unsustainable over the medium term. Together with efforts to bring the government deficit down, they have announced their intention to conduct a debt operation to ensure debt sustainability.”

“We welcome the authorities’ intentions to implement policies that will ensure the sustainability of public finances,” it said.

“The nature of engagements and debt operations between Ghana and its creditors are sovereign decisions,” the IMF, said.

Finance Minister, Ken Ofori-Atta, presenting the 2023 budget and economic policy of government to Parliament on November 24, 2022, hinted of a debt restructuring.

The Minister did not provide details of what form the debt restructuring would take and said that would be communicated later.

Ghana’s total public debts is currently more than 460 billion, about 76 per cent of the country’s Gross Domestic Product.

This is above the international accepted threshold of 55 per cent to GDP.

Experts believe the country’s debt would continue to soar due to dwindling revenue and increasing expenditure due in part to demand by workers for better conditions of services, payment of arrears, as well as the need for the government to meet the payment of maturing debt.

Ghana is currently pursuing an IMF programme for Balance of Payment support.

Ghana intends to secure $3 billion over the next three years from the International Monetary Fund to stabilise the economy and shore up the Cedi.

The Cedi since the beginning of the year had come under intense pressure from its international peers such as the dollar and pounds sterling.

Already, an IMF team had already visit the country to conduct an assessment on the Ghanaian economy.

The deal has not been concluded and another IMF mission would soon visit the country to negotiate with the government for a stall level agreement to be reached.

The IMF had earlier said Ghana’s fiscal and debt vulnerabilities worsened fast amid an increasingly challenging external environment. During the COVID-19 pandemic, Ghana’s public debt increased significantly.

It said at the same time, the government’s efforts to preserve debt sustainability were not seen as sufficient by investors, leading to credit rating downgrades, the exit of non-resident investors from the domestic bond market, and ultimately Ghana’s loss of access to international capital markets.

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