IMF staff, Ghana agree first review of $3 billion programme

ACCRA (Reuters) -The International Monetary Fund and Ghana’s government have reached a staff-level agreement on the first review of a $3 billion loan programme, paving the way for a disbursement of $600 million once it is approved by the IMF’s executive board.

Ghana and its official creditors now quickly need to agree a debt restructuring plan to get board approval and receive the money, the IMF said in a statement on Friday.

Finance Minister Ken-Ofori Atta said the government aimed to present a proposed plan to official creditors next week.

“I believe we are doing well with regards to negotiations,” he told a press conference in the capital Accra.

Prices of Ghana’s international dollar bonds rose up to 1.1 cents on the dollar on Friday. They have been rising gradually since March on hopes a restructuring deal can be achieved, although they had suffered a minor relapse this week due to a widespread selloff in global debt markets.

The West African country asked the IMF for financial support last year as it grappled with its worst economic crisis in a generation brought on by spiralling public debt.

The three-year extended credit facility is contingent on domestic and external debt restructuring, spending cuts and other fiscal adjustments. Ghana received a first $600 million tranche of the loan in May.

Ghana’s official creditors formed a committee in May co-chaired by China and France for debt restructurings talks. They were sent a “working proposal” for debt restructuring in June, according to sources with direct knowledge of the matter.

The gold, oil and cocoa producer aims to cut around $10.5 billion in interest payments on its external debt over the next three years to implement the IMF loan deal.

The Fund noted on Friday that growth had been more resilient than initial expectations, with declining inflation, a more stable exchange rate and better fiscal and external positions.

Ghana is on track to lower the fiscal primary deficit on a commitment basis by about 4 percentage points of GDP in 2023, it said, adding that spending had remained within programme limits.

At the end of 2022, its debts to countries including China and members of the Paris Club of creditor nations were $5.4 billion of the $20 billion external debt due to be restructured, according to a government presentation to investors. The total external debt stock was about $30 billion.

(Reporting by Bhargav Acharya, Maxwell Akalaare Adombila and Christian Akorlie; Additional reporting by Marc Jones; Writing by Sofia Christensen and Rachel Savage; Editing by Alexander Winning and Sharon Singleton)