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Ghana Secures $2.8B Debt Relief: Bold Move for Economic Revival

Ghana Secures $2.8 Billion Debt Relief: A Major Step Toward Economic Recovery

Debt Relief of $2.8 Billion Secured by Ghana: Since all participating creditor nations have formally signed the Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC), Ghana has achieved a major milestone in its debt restructuring efforts.

Through the International Monetary Fund (IMF)-supported scheme, Ghana will get $2.8 billion in debt service relief, paving the groundwork for a significant economic recovery.

With this Memorandum of Understanding in place, Ghana’s government may reallocate desperately needed funds to important development projects and economic revival. In order to ensure a smooth debt treatment procedure, the implementation phase will now shift to bilateral agreements with specific OCC member nations.

The Ghanaian government is dedicated to accelerating these agreements so they can be implemented quickly. Finance Minister Dr. Cassiel Ato Forson thanked China and France, the co-chairs of the creditor committee, for playing a crucial part in negotiating this deal during a news conference in Accra. He underlined that the agreement is a significant step in the direction of long-term debt sustainability.

As part of a three-year IMF-backed initiative, Ghana started a comprehensive debt restructuring program to reduce its debt-to-GDP ratio to 55% by 2026. The deal comes after lengthy discussions with the Bilateral Official Creditor Committee, which France and China co-chaired. On January 12, 2024, the Ministry of Finance made the announcement as part of the Debt Treatment initiative of the G20 Common Framework.

The restructuring aims to:

– Reduce the debt-to-GDP ratio to below 55% by 2028 (in present-value terms).

– Lower the debt service-to-revenue ratio to under 18% from 2028 onwards.

– Eliminate any external financing gaps within the IMF program period.

According to Dr. Forson, he collaborated closely with the ministry’s technical staff to evaluate the country’s economic status and create a strategic action plan even before taking office. A significant accomplishment in these efforts is the recent signature of an MOU with each of the 25 participating creditor countries.

Regarding $2.7 billion in outstanding debt, Ghana is negotiating with private commercial banks in addition to its government creditors. According to Dr. Forson, the government is dedicated to conducting fair discussions using the comparability of treatment principles and the “most favoured creditors” clause as a guidance. In order to finish the final 7% of the debt restructuring process, he again underlined the significance of accelerating talks. In order to help Ghana complete these agreements, he called on external commercial creditors.

Following the success of the debt restructuring, the government will now shift focus toward economic recovery. Dr. Forson reaffirmed that Ghana is implementing an ambitious reform agenda aimed at fostering inclusive economic growth. The debt relief secured will provide the fiscal space needed to drive sustainable development and financial stability for the country.

Ghana’s successful MoU signing with its official creditors marks a crucial step toward economic stability and growth. With the implementation phase now underway, the government is poised to complete the remaining negotiations and direct resources toward national development.

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