Ghana minister confident of official creditor debt deal by end of next week

According to statements made by Ghana’s Minister of Finance Ken Ofori-Atta on Thursday, he expressed his confidence that the government will be able to negotiate a restructuring agreement with its formal creditors by the end of the following week.

The most significant problems that still need to be resolved, according to Ofori-Atta, are the “cut-off date” (the date after which new debts would not be restructured) and the comparability of treatment amongst creditors. She also stated that any cut-off date would be acceptable for Ghana.

Every creditor on the committee, which China and France co-chair, is concerned about their interests, and he claimed that not a single creditor opposes debt restructuring.

In December of 2022, Ghana defaulted on most of its foreign loans. This occurred after the country was prevented from accessing international financial markets and its debt expenses spiraled out of control, which exacerbated an economic crisis that had already been characterized by a decline in the value of its currency and an increase in inflation.

Additionally, to obtain the approval of the executive board of the International Monetary Fund for the subsequent $600 million payout from a $3 billion rescue loan, it must strike a restructuring agreement with its formal creditors.

“My hope is that by the end of next week we’ll have what we need,” According to Ofori-Atta. “One of the key issues is the cut-off date and ensuring that there is comparability of treatment.”

According to a story Reuters published in September, the official creditors, who hold around $5.4 billion of Ghana’s $20 billion external debt being restructured, were discussing dates in March 2020 and December 2022.

The date of March 24, 2020, was considered a cut-off date because that is when the G20 introduced its debt service suspension initiative (DSSI) to assist the world’s poorest countries in coping with the fallout of the COVID-19 crisis, according to two sources at the time. Although December 31, 2022, is close to the date Ghana defaulted on its debt, another date being considered was March 24, 2020. In the DSSI, Ghana did not take part in any activities.

No matter what happens, we will be able to succeed. When Ofori-Atta was asked whether there was a date that Ghana would like, he responded by saying, “So the issue is for the membership of the OCC to get comfortable with how it impacts them.”

“Everybody is looking at comparability of treatment and China and France, certainly are the (official creditor committee) co-chairs, so they have a good impact on what will happen.”

By the G20 Common Framework platform, Ghana is in the process of restructuring its debt. This platform has been attacked for its delays and disagreements between different groups of creditors. Zambia’s process was interrupted earlier this month when the country’s official creditors rejected an agreement the administration had made with foreign bondholders.

Overseas bondholders amount to around $13 billion that Ghana owes. According to Ofori-Atta, they are having fruitful conversations at the moment.