Mr Seth Terkper, the former Finance Minister, has raised questions regarding the GHS 77.6 billion cedis ($7 billion) debt reportedly written off by the Ghanaian government to the Bank of Ghana. In a series of tweets, he emphasized the significance of the Ghc37b-to-Ghc38b figure in recent fiscal management and sought additional information from the current Finance Minister.
The Budget Review Report for 2022 showed a steep decline of about Ghc37b in “arrears” without clear explanations of payments. The International Monetary Fund (IMF) Program report indicated that about US$3.3 billion (approximately Ghc36.9b, with an exchange rate of $1=11.2) of these “arrears” was added to the Domestic Public Debt, while some were settled through the Energy Sector Levy Act (ESLA) and government bonds.
The government’s move to write off half of the debt and replace the remainder with a lower-yielding, 15-year bond came as part of its efforts to restructure domestic debt, a necessary step to qualify for the next tranche of the $3 billion IMF rescue loan. Ghana is now focusing on negotiations with external creditors after concluding the first phase of domestic debt restructuring in February.
The current debt restructuring plan includes 123 billion Ghana cedis of domestic debt, covering various aspects such as domestic U.S. dollar bonds, cocoa bills, pension funds, debt owed to independent power producers, and the central bank. Notably, the central bank was included in the restructuring despite its initial desire to be excluded, as the IMF insisted on its involvement to achieve debt restructuring targets.
