Ghana inches closer to IMF bailout with draft debt agreement

Ghana has received a draft agreement for restructuring $5.4 billion in debt with its bilateral creditors, including China and France. 

This move represents a significant step towards resolving the West African nation’s worst economic crisis in decades.

Finance Minister Mohammed Amin Adam announced the development on Friday, highlighting that a swift review of the draft will pave the way for finalization and signing. 

This paves the way for the International Monetary Fund (IMF) to potentially approve a $360 million disbursement from Ghana’s $3 billion bailout program next month.

The news comes after Ghana defaulted on most of its foreign debt in December 2022 due to rising servicing costs. 

This placed them as the second African nation, alongside Zambia, to default during the COVID-19 pandemic.

While Ghana has successfully restructured most of its domestic debt, negotiations with international bondholders holding roughly $13 billion remain ongoing. 

Finance Minister Adam indicated that these talks, which concluded last month, revealed only “very narrow” differences. 

The government remains committed to reaching an agreement with these creditors.

The draft agreement with bilateral creditors is expected to provide a much-needed boost for the Ghanaian Cedi currency, according to local economist Leslie Dwight Mensah. 

Additionally, $2.32 billion in foreign loans are anticipated by year-end, further bolstering Ghana’s international reserves and easing pressure on the Cedi.

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