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Ghana’s official creditors to resume debt restructuring talks Jan. 8

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Ghana’s official creditors to resume debt restructuring talks Jan. 8

According to three sources, Ghana’s official creditors are scheduled to convene on Monday, January 8, to discuss the restructuring of around $5.4 billion in loans. This meeting is a significant step towards securing the next round of funding from the International Monetary Fund (IMF).

The Official Creditor Committee (OCC), co-chaired by the governments of China and France, holds approximately 25% of Ghana’s $20 billion external debt that is earmarked for restructuring. The key focus of the meeting will be to reach an agreement on a “cut-off date,” which determines when new loans from bilateral creditors will no longer be subject to restructuring. This date has become a bottleneck in Ghana’s debt restructuring process. Some creditors argue for December 31, 2022, as the cut-off date, citing Ghana’s default earlier in that month, while others support March 24, 2020, when the Group of 20 introduced the debt service suspension initiative (DSSI) to aid the world’s poorest countries during the COVID-19 crisis. It is worth noting that Ghana did not participate in the DSSI. T

Paris Club, which consists of major creditor nations (excluding China), will hold a meeting on Friday before the OCC meeting on January 8. The Paris Club has shared a technical note with other creditors and multilateral lenders proposing December 2022 as the cut-off date. However, despite ongoing negotiations, creditors have not reached a consensus. If an agreement on the cut-off date is reached, it will indicate that a broader consensus on debt restructuring is achievable.

In order to receive approval for the next $600 million payout from a $3 billion rescue loan, Ghana needs to secure a debt restructuring agreement with official creditors. The IMF requires assurance that bilateral creditors are providing debt relief in accordance with the IMF program.

Alongside seeking bilateral debt restructuring under the Common Framework, Ghana is also in discussions with overseas bondholders to restructure its over $13 billion international debt. Prominent bondholders include major global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein, and Neuberger Berman.

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