Government Secures Agreement with Official Creditors for IMF Bailout, Aiming for Debt Sustainability

The government has officially communicated the successful negotiation of an agreement with its Official Creditors, aligning with the objectives of the International Monetary Fund (IMF) program to restore debt sustainability.

Following the achievement of the first tranche in 2023, the government is actively pursuing the second tranche of the IMF bailout. In 2023, it initiated the Domestic Debt Exchange Programme (DDEP) as part of the ongoing efforts to enhance Ghana’s long-term debt sustainability.

In a statement released on January 12, 2024, the Ministry of Finance clarified that the agreement falls under the G20 Common Framework, focusing on a Comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative.

The government expressed confidence that the negotiated debt treatment, providing substantial relief throughout the program duration, will facilitate the allocation of additional financial resources for crucial public investments.

The Finance Ministry acknowledged the collaborative efforts of Official Creditors in reaching this agreement, emphasizing the shared commitment to restoring debt sustainability aligned with the IMF program targets. The government anticipates that the agreed-upon debt treatment will enable the allocation of extra financial resources for vital public investments.

The Ministry highlighted that this agreement with Official Creditors is a pivotal step towards obtaining IMF Executive Board approval for the first review of the Fund-supported program. This approval is instrumental in unlocking the next tranche of IMF financing amounting to US$600 million.

Additionally, the government is optimistic that the IMF Board Approval will catalyze the World Bank Board’s consideration of US$300 million in Development Policy Operation (DPO) financing.

The statement outlined that the terms of the agreed debt treatment will be formalized in a Memorandum of Understanding between Ghana and Official Creditors, to be implemented through bilateral agreements with each member of the Official Creditor Committee. The government looks forward to further engagement with Official Creditors to ensure the swift implementation of the agreed-upon terms.

The agreement with Official Creditors not only secures IMF Executive Board approval for the first review, unlocking the next tranche of IMF financing, but it is also anticipated to prompt the World Bank Board’s consideration of US$300 million in Development Policy Operation financing. Moreover, the World Bank is expected to provide support to the Ghana Financial Stability Fund with US$250 million to address the impact of the Domestic Debt Exchange Programme on the financial sector. These disbursements play a crucial role in Ghana’s economic recovery and ambitious reform agenda.