Ghana has successfully reached an agreement with the Paris Club on debt treatment, marking a pivotal development that opens the door for the International Monetary Fund (IMF) to release the next tranche of $600 million to support the country's economy.
A reliable source involved in the negotiations informed Graphic Business that the approval and subsequent release of the IMF tranche would also trigger an additional $500 million in support from the World Bank, serving as a crucial financial cushion for Ghana.
The Ministry of Finance is expected to issue an official statement to announce and provide details on the agreement between Ghana and its official creditors, a move that paves the way for the Executive Board of the IMF to approve the disbursement of the $600 million under its $3 billion bailout program.
Negotiations faced challenges, with the “cut-off date” emerging as a crucial point of contention. Bilateral creditors, including China and France co-chairing the Official Creditor Committee (OCC), were at an impasse over whether to set the cut-off date at December 31, 2022, or March 24, 2020.
The disagreement revolved around Ghana's default in December 2022 and its non-participation in the Group of 20's debt service suspension initiative (DSSI) introduced to help countries deal with the fallout of the COVID-19 crisis.
While the Paris Club agreement is a significant step forward, Ghana still needs to formally accept the proposal. According to sources, the OCC plan outlines no reduction to principal and interest rates overall, with Ghana not making payments for the next four years, resuming thereafter.
Finance Minister Ken Ofori-Atta expressed optimism about the progress, telling Bloomberg that he aims to conclude the review of the draft term sheet by Friday. He emphasized that all parties involved are in agreement regarding the broad framework, paving the way for the IMF to finalize the disbursement.