The International Monetary Fund (IMF) has revealed that Ghana aims to secure $10.5 billion in external debt service relief between 2023 and 2026, as stated in the IMF's Debt Sustainability Analysis released on Wednesday.
Currently facing an unsustainable debt burden, Ghana plans to reduce the risk of debt distress to a “moderate” level by 2028.
On Wednesday, the IMF's executive board granted Ghana a three-year, $3 billion rescue loan, offering hope for the troubled West African nation as it battles the most severe economic crisis in decades, exacerbated by the impact of the COVID-19 pandemic and the conflict between Russia and Ukraine.
In an effort to address its debt challenges, Ghana is undertaking debt restructuring measures, including seeking external debt relief through the Group of 20's Common Framework platform, as well as conducting a domestic debt exchange earlier this year.
According to the IMF, Ghana faces a $15 billion financing gap in its balance of payments from 2023 to 2026, with the World Bank committed to providing $1.6 billion in budget and balance-of-payments support.
The IMF has set a target for Ghana to reduce its public debt-to-GDP ratio from 88.1% at the end of 2022 to 55% by 2028, given the country's medium “debt carrying capacity”.
The IMF report highlights the risks associated with potential domestic policy setbacks, particularly in light of the upcoming general elections in late 2024, which could have negative implications for the economic projections.
Additionally, Ghana faces risks such as social unrest if economic conditions fail to improve for the population, challenges in regaining market access for issuing debt, and potential instability in the domestic financial sector due to the domestic debt exchange.
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