US$3bn bailout: IMF board approval’ll delay till mid-2023 – EIU predicts

1st May 2023

Ken ofori Attah

The board of the International Monetary Fund is likely to approve the US$3 billion extended credit facilty for Ghana by mid-2023, the Economic Intelligence Unit has predicted.
In its latest report, the EIU explained that the delay would be caused by prolonged negotiations in relation to the restructuring of Ghana’s external debt between the country and its bilateral partners.

Ghana approached the IMF in mid-2023 for a bailout.

The government has, so far, concluded a doomestic debt exchange programme.

It is currently in talks with China and the Paris Club toward securing financing assurances for the restructuring of its external debt.

Both the IMF and the US government have urges the bilateral partners to speed up the process for Ghana but a deal is yet to be announced.

A few weeks ago, Finance Minister Ken Ofori-Atta said the deal would be clinched in May this year.

This was after a March deal announced by President Nana Akufo-Addo failed to materialise.

The EIU, in its 2023 country report on Ghana, said given the country’s pressing macroeconomic crisis, “the conclusion of a domestic debt-swap operation in February and increasing international attention on speeding up external debt restructuring, our core forecast remains that the IMF programme will be approved by mid-2023.”

“We expect Ghana to secure restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike”, the London-based political and economic analyst said.

“This will include a combination of write-offs, maturity extensions and reductions in interest rates”, it noted.

It added: “We expect official creditors to agree to a deal in 2023 and this, combined with the domestic debt restructuring that has already been secured, should provide enough reassurance to reduce Ghana’s risk of debt distress and allow the IMF to approve the agreed programme”.

“However, there is a material risk that IMF board approval will be delayed owing to prolonged external debt-restructuring negotiations, given the involvement of multiple stakeholders in the process,” it noted.

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