Ghana has successfully restructured 93% of its external debt, with only 7% remaining to be negotiated, valued at approximately $2.7 billion. This significant achievement was confirmed by Finance Minister Dr. Cassiel Ato Baah Forson during a recent media briefing where he highlighted the government’s progress under the International Monetary Fund (IMF) program.
Dr. Forson emphasized the complexity of the situation, noting, “The road ahead is narrow but steep.” The unresolved portion of Ghana’s debt involves negotiations with around 60 commercial banks, which operate independently of the formal groups, making these discussions particularly challenging.
Unlike official creditors and bondholders who can be grouped for streamlined negotiations, each of the 60 institutions must be approached individually. This approach complicates the process since each bank has its own unique terms and conditions.
The Finance Minister assured the public of the government’s commitment to expedite these negotiations. A timeline for engagement with these banks is expected to be announced shortly. He reiterated the principles of “comparability of treatment” for all creditors, aiming to uphold fairness across the board.
Earlier achievements included signing a Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC), representing 25 creditor nations. This agreement restructured $5.1 billion of bilateral loans and secured $2.8 billion worth of debt service relief until 2026.
Experts have noted the importance of transparency and agility as Ghana approaches the final stages of its debt restructuring. Franklin Cudjoe, director of the Accra-based think tank IMANI Center, commented, “This isn’t just about numbers; it’s about persuading 60 institutions to take haircuts without spooking future investors.”
Despite the sizable challenges still remaining, Dr. Forson expressed confidence about the progress made so far. He highlighted the necessity of these restructuring efforts as part of broader fiscal reforms aimed at stabilizing Ghana’s economy. Since the initiation of this debt restructuring spree back in December 2022, Ghana aims to bring down its debt-to-GDP ratio to below 55% by 2028, with projected figures already showing improvement.
Public debt has reportedly decreased from 90% of GDP to 74.6% as of December 2024, providing the government with more fiscal space to maneuver. Nevertheless, the last 7% of external debt could still present diplomatic and administrative hurdles. “Each bank has its own risk appetite and legal constraints,” Cudjoe added, raising concerns about potential delays.
The government’s plan post-restructuring includes focusing on infrastructure investment and stimulating growth through private sector incentives. International observers are cautiously optimistic about Ghana’s restructuring process, viewing it as indicative of potential pathways for other African nations facing similar debt distress.
With pre-election pressures building, the current administration under President Mahama faces significant demands to maintain fiscal discipline. Osei-Asare, former Minister of State at the Finance Ministry, urged the government to uphold the terms of the agreement signed with the creditor committee to guarantee long-term sustainability.
Importantly, the Finance Minister reaffirmed his commitment to necessary structural reforms, particularly targeting the struggling cocoa and energy sectors. Legacy debts totaling $1.6 billion within the energy sector and declining cocoa production, which recently hit its lowest levels in 15 years, are focal points for restoration efforts.
Looking forward to 2025, Ghana’s Institute of Economic Affairs (IEA) has encouraged the government to prioritize fiscal responsibility to avert future debt restructuring. They emphasized the role of prudent expenditure management and improved revenue collection to inspire investor confidence and fulfill IMF compliance.
“Debt relief alone won’t fix systemic issues,” Dr. Forson has been quoted, illustrating the need for comprehensive economic strategies alongside debt restructuring initiatives.
Ghana’s debt restructuring progress provides valuable lessons for nations around the globe grappling with similar financial tribulations. The final phase of negotiations with commercial creditors will undoubtedly be pivotal for the nation’s economic recovery strategy, asserting whether or not Ghana can effectively transition from recovery to sustainable growth.