Government secures MoU with Official Creditor Committee but agreement with Commercial Creditors is outstanding.
The Government of Ghana has reached a Memorandum of Understanding (MoU) with its Official Creditor Committee (OCC) regarding the debt treatment agreed upon in January 2024. Co-chaired by China and France, the OCC played a crucial role in achieving this milestone, according to a statement from the Ministry of Finance. However, an agreement with commercial creditors, including external bondholders, has yet to be reached.
The statement announcing the MOU with the official Creditors stated that "The agreement will also bolster the current and ongoing discussions with private creditors, with whom Ghana remains committed to finding a comparable agreement as early as possible." It further noted, "Ghana continues to engage in good faith with all commercial external creditors, striving to finalise restructuring agreements that respect Ghana's need for debt relief and the comparability of treatment principle."
While the MoU is a significant step in the government's quest to restructure its external debt, reaching an agreement with commercial creditors is equally important to complete the debt restructuring process.
Today's MoU formalises the agreement in principle reached with Official Creditors in January, marking "a crucial step towards Ghana restoring long-term debt sustainability", the statement noted. The financial terms of the agreement remain unchanged, providing significant debt service relief during the International Monetary Fund (IMF) supported programme period. This relief will enable the allocation of financial resources to critical areas such as infrastructure, healthcare, and education.
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The formalisation of the OCC agreement is expected to pave the way for the IMF Executive Board's approval of the second review of the Fund-supported Post Covid-19 Programme for Economic Growth (PC-PEG). This approval will enable the disbursement of the next tranche of IMF financing, amounting to US$360 million. Additionally, the IMF Board's approval is anticipated to trigger "more financial assistance from our development partners, particularly the World Bank," the statement explained.
Each official creditor will now follow its internal procedures to sign the MoU. Once signed, the agreed terms will be implemented through bilateral agreements with each OCC member. The Government of Ghana urged its official creditors to expedite their internal processes towards the signing of these bilateral agreements.
The Minister for Finance, Dr. Mohammed Amin Adam, said the MoU "marks an extraordinary milestone in Ghana's debt restructuring journey and will further strengthen our ambitious reform agenda with the strong support of our development partners."
Meanwhile, the government reiterated its firm commitment to remain in arrears with its external commercial creditors until agreements compatible with the "comparability of treatment principle are reached," the statement noted.
