Ghana has received a draft memorandum of understanding on debt restructuring from its bilateral creditors which it will now quickly review with the aim of signing it soon, its finance minister said on Friday.
The memorandum will formalise a provisional agreement reached in January with government creditors, including China and France, to restructure $5.4 billion of debt, as the West African country tries to chart its way out of its worst economic crisis in a generation.
Finance Minister Mohammed Amin Adam said the document paved the way for the International Monetary Fund’s executive board to meet next month to approve a disbursement of $360 million under the country’s $3 billion bailout programme.
“As of yesterday, 23 May 2024, we officially received the draft Memorandum of Understanding from the Official Creditor Committee (OCC),” Amin Adam told a press briefing.
“The government, therefore, with support from our financial and legal advisors, will quickly review this draft agreement with a view to finalising and signing the agreement with the OCC as soon as possible.”
Ghana defaulted on most of its overseas debt in December 2022 after servicing costs soared, becoming the second African country after Zambia to default during the COVID-19 pandemic.
It has restructured most of its local debt but is yet to agree on a deal with holders of about $13 billion in international bonds.
On the talks with Eurobond holders, Amin Adam said they ended in the middle of last month with “very narrow” differences, adding that the government was determined to reach an agreement.
He said $2.32 billion in foreign loans by year-end were expected to shore up the country’s international reserves and relieve pressure on the cedi currency.
Local economist Leslie Dwight Mensah, a research fellow at the Institute for Fiscal Studies, said the draft agreement with official creditors would be a much-needed sentiment boost for the cedi.