Ghana’s official creditors are scheduled to convene on Monday, January 8, to engage in discussions concerning the restructuring of approximately $5.4 billion in loans, as reported by Reuters. This crucial meeting is viewed as a significant step toward unlocking the next tranche of funding from the International Monetary Fund (IMF), according to three reliable sources.
The Official Creditor Committee (OCC), co-chaired by China and France, holds about 25% of Ghana’s $20 billion external debt slated for restructuring. The focus of the upcoming meeting is anticipated to revolve around agreeing on a “cut-off date,” determining the point beyond which new loans from bilateral creditors will not undergo restructuring.
Sources familiar with the matter have revealed that the specific cut-off date has become a major point of contention in Ghana’s debt restructuring process. Some creditors advocate for December 31, 2022, citing Ghana’s default earlier that month, while others support March 24, 2020, the date when the Group of 20 introduced the debt service suspension initiative (DSSI) to aid the world’s poorest countries during the COVID crisis.
The Paris Club, comprising major creditor nations (excluding China), will convene on Friday in preparation for the OCC meeting on January 8, according to two sources. The Paris Club has proposed December 2022 as the cut-off date in a technical note shared with other creditors and multilateral lenders.
While Ghana grapples with the cut-off date issue, creditors have yet to reach a consensus. If an agreement on the cut-off date is reached, it signifies a broader consensus on debt restructuring is within reach.
Ghana, known for its gold, cocoa, and oil production, must secure an agreement on debt restructuring with official creditors to obtain approval from the IMF executive board for the next $600 million payout from a $3 billion rescue loan. The IMF requires financing assurances to ensure that bilateral creditors are providing debt relief in line with the IMF program.
In addition to the official creditors, Ghana, having requested bilateral debt restructuring under the Common Framework a year ago, is engaged in talks with overseas bondholders to restructure its more than $13 billion in international debt. Major bondholders include global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein, and Neuberger Berman.