The government has announced that it has reached an agreement with its Official Creditors in restoring debt sustainability in line with the International Monetary Fund (IMF) programme targets.

The government is seeking to secure the 2nd tranche of the IMF bailout after securing the 1st tranche in 2023.

The government embarked on a Domestic Debt Exchange Programme (DDEP) in 2023, towards restoring Ghana’s long-term debt sustainability.

The Ministry of Finance in a statement dated January 12, 2024, explained that the agreement was under the G20 Common Framework, ‘on a Comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative’.

The government expressed confidence that the debt treatment, which entails significant flow relief during the programme period, ‘will allow for the allocation of additional financial resources towards critical public investments’.

“The Government of Ghana commends the support and cooperation of its Official Creditors in reaching this agreement, which demonstrates a mutual commitment to restoring debt sustainability in line with the International Monetary Fund (IMF) programme targets. The Government is confident that this debt treatment, which entails significant flow relief during the programme period, will allow for the allocation of additional financial resources towards critical public investments.”

The Finance Ministry noted that the agreement with the Official Creditors paves the way for IMF Executive Board approval of the first review of the Fund-supported programme.

This, the Ministry explained, allows for the next tranche of IMF financing of US$600 million to be disbursed.

The government also expressed hope that the IMF Board Approval will trigger World Bank Board consideration of US$300 million in Development Policy Operation (DPO) financing.

“The terms of the agreed debt treatment are expected to be formalised in a Memorandum of Understanding between Ghana and Official Creditors, which will then be implemented through bilateral agreements with each member of the Official Creditor Committee. The Government of Ghana looks forward to further engaging with the Official Creditors to ensure prompt implementation of the agreed terms.

This agreement with the Official Creditors paves the way for IMF Executive Board approval of the first review of the Fund-supported programme, allowing for the next tranche of IMF financing of US$600 million to be disbursed. The IMF Board Approval should also trigger World Bank Board consideration of US$300 million Development Policy Operation (DPO) financing. In addition, the World Bank is expected to support the Ghana Financial Stability Fund with US$250 million to help address the impact of the Domestic Debt Exchange Programme (DDEP) on the financial sector. These disbursements are key for Ghana’s economic recovery and ambitious reform agenda.”