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Government and Official Creditors Committee conclude agreement on debt treatment

The government has successfully reached an agreement with the Official Creditors Committee (OCC) on the treatment of the country's external debt.

Finance Minister, Ken Ofori-Atta

Negotiations had been underway, with one of the key outstanding issues being the cut-off date for including external debt in the restructuring operation. The government and the OCC have now agreed on this crucial aspect of the debt relief plan.

This development follows the Ministry of Finance's appeal to bilateral creditors in October 2023, urging them to swiftly agree on the terms of debt relief. The successful conclusion of these negotiations is crucial for Ghana to secure the second tranche of the $3 billion International Monetary Fund (IMF) bailout package.

“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) program targets. The Government is confident that this debt treatment, which entails significant flow relief during the program period, will allow for the allocation of additional financial resources towards critical public investments.”

Ghana had previously received $600 million from the IMF in May 2023 as the first tranche of the bailout package. The remaining funds hinged on the outcome of the country's engagements with its bilateral creditors.

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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 formalized 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 program, allowing for the next tranche of IMF financing of US$600 million to be disbursed. The IMF Board Approval should also trigger the World Bank Board consideration of US$300 million in 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 Program (DDEP) on the financial sector. These disbursements are key for Ghana’s economic recovery and ambitious reform agenda.”

The agreement with the Official Creditors Committee marks a significant step forward in Ghana's efforts to restructure approximately $5.4 billion in external debt. The finalized roadmap for this restructuring sets the stage for addressing the economic challenges posed by the country's debt situation.

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