Ghana closes domestic debt programme as international creditors discuss next steps

Ghana’s finance ministry has announced that the country's domestic debt exchange programme has been successfully closed as foreign lenders discuss forming an official creditor committee, which would be a first step for the country to start debt relief talks as it struggles to manage its post-Covid economic crisis.

Ghana's Finance Minister Ken Ofori-Atta at a news conference in Accra, Ghana 13 December 2022. © Cooper Inveen/Reuters

After five extensions of a December deadline, Ghana closed its domestic debt exchange programme (DDEP) on 10 February with more than 80 percent participation of eligible bonds, the finance ministry said on Tuesday.

Addressing domestic debt means the country is getting closer to securing a $3 billion (2.8 billion euro) International Monetary Fund bailout.

Ghana decided to suspend foreign debt payments in December, and in January it became the fourth country to apply to the ‘Common Framework’ platform, an initiative launched in 2020 by the Group of 20 major economies to help streamline debt restructuring for poorer countries affected by the Covid-19 pandemic.

Ghana’s total external debt is $28.4 billion (26.39 billion euros), including $1.9 billion (1.77 billion euros) it owes to members of the Paris Club, a group of creditor countries tasked with coordinating sustainable solutions to payment difficulties by debtor countries.

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The Paris Club has contacted other creditors, including China – Ghana’s single biggest bilateral creditor – to engage on forming an official creditor committee, which would work towards securing assurances from creditors that they are willing to rework their debt.

The IMF requires these assurances to allow for money disbursements.

Chad became the first country to ask for a debt overhaul under the common framework in January 2021, and a deal was reached only in November 2022, without providing debt relief.

Zambia applied to the Common Framework platform in February 2021, but a committee was only formed in May 2022, when the creditors agreed that France and China would co-chair the group.

The committee met for the first time in June, and again in August, and there is still no resolution.

(with wires)