Ghana : Official creditors of Ghana will convene on Monday to deliberate the terms of debt restructuring

ACCRA – According to three sources who spoke to Reuters, Ghana’s official creditors are set to convene on Monday to talk about restructuring the country’s $5.4 billion in loans. This is a crucial step towards obtaining the country’s next funding tranche from the IMF.

Of Ghana’s $20 billion in external debt designated for restructuring, the governments of China and France, who co-chair the Official Creditor Committee (OCC), are among the bilateral lenders that possess approximately 25% of the debt.

According to people with knowledge of the situation, the meeting will likely centre around reaching a consensus regarding a “cut-off date”—the deadline beyond which new loans from bilateral creditors will not be restructured. Ghana’s debt rework has run into trouble with defining this date.

Since Ghana defaulted earlier that month, some creditors are reportedly in favour of December 31, 2022, as the cutoff date. Some, however, advocated for March 24, 2020, as that is when the Group of 20 unveiled their debt service suspension initiative (DSSI), which aims to assist the world’s poorest nations in addressing the aftermath of the COVID-19 pandemic. Ghana refrained from taking part in the DSSI.

The Paris Club of major creditor nations, which does not include China among its permanent members, will meet on Friday in advance of the OCC meeting on January 8, according to two sources.

According to one of the sources with direct knowledge, the Paris Club this week shared a technical note on Ghana with other bilateral and multilateral lenders. The note also stated that the group of wealthy countries is suggesting December 2022 as the deadline.

“Ghana is still about cut-off date, but creditors haven’t agreed yet,” said a source. “If the cut-off date is agreed, that means an agreement on debt restructuring is close.”

A Paris Club representative refrained from commenting on meetings that have not yet taken place. Ghana’s finance ministry did not immediately respond to a request for comment.

In preparation for the Jan. 8 OCC meeting, the Paris Club of major creditor nations, which does not count China among its permanent members, will convene on Friday, two sources said.

The Paris Club this week shared a technical note with other bilateral creditors and multilateral lenders on Ghana, one of the sources said, adding that the group of rich nations is proposing December 2022 as the cut-off date, one source with direct knowledge said.

“Ghana is still about cut-off date, but creditors haven’t agreed yet,” the source said. “If the cut-off date is agreed, that means an agreement on debt restructuring is close.”

A spokesperson for the Paris Club declined to comment on meetings that have not yet taken place. Ghana’s finance ministry did not immediately respond to a request for comment.

The West African country, which produces gold, cocoa, and oil, needs to come to an agreement on a debt restructuring with its official creditors to secure the IMF executive board’s approval for the next $600 million payout from a $3 billion rescue loan.

This is because the Washington-based lender needs financing assurances that debt relief is being provided by bilateral creditors in accordance with the IMF programme.

Ghana, where a deep economic crisis has seen inflation and the government’s debt servicing costs spiral, asked a year ago for a bilateral debt restructuring under the Common Framework, a process set up during the COVID-19 pandemic by the G20 leading economies.

It is also in talks with overseas bondholders to restructure its more than $13 billion in international debt. Holders of the bonds include major global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein and Neuberger Berman.