Ghana's Official Creditors Set to Discuss Debt Restructuring on January 8

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Ghana's official creditors are poised to convene on Monday, January 8, to deliberate on the restructuring of approximately $5.4 billion in loans. This meeting holds immense significance as it signifies a critical step towards unlocking the next tranche of funding from the International Monetary Fund (IMF), disclosed by three informed Reuters sources.

Related To This: IMF Reschedules Ghana's Review and Disbursement Meeting Over $600 Million To January 2024

The Official Creditor Committee (OCC), co-chaired by the governments of China and France, wields influence over approximately 25% of Ghana's total external debt, earmarked for restructuring. It is important to note that these governments also act as bilateral lenders to Ghana.

Key Focus: "Cut-off Date" and Disagreements

The impending meeting is anticipated to primarily revolve around brokering an agreement concerning a "cut-off date," which denotes the point after which new loans from bilateral creditors will not undergo restructuring. Sources familiar with the situation noted that this particular date has been a contentious issue in Ghana's debt restructuring process.

Related To This: No US$600M Tranche If You Do Not Reach Debt Treatment Agreement With Creditors - IMF To Ghana

Debates are expected to ensue regarding the "cut-off date," with some creditors advocating for December 31, 2022, as the cut-off date, citing Ghana's default earlier that month. Conversely, others support March 24, 2020, the date when the Group of 20 introduced the debt service suspension initiative (DSSI) to assist the world's poorest nations during the COVID crisis.

Paris Club's Pre-Meeting and IMF's Requirements

In anticipation of the OCC meeting, the Paris Club, representing major creditor nations (excluding China), is set to convene on Friday, according to informed sources. The Paris Club has already circulated a technical note advocating for December 2022 as the preferred cut-off date. It is worth mentioning that Ghana's adherence to the DSSI is an additional factor under discussion.

Related To This: Seek A Lengthy Debt Repayment Plan With China - US Finance Professor To Ghana

Consequences and Imperatives for Ghana

The ability to resolve the "cut-off date" issue is pivotal for Ghana as it seeks to obtain an agreement on debt restructuring with official creditors, a prerequisite for approval from the IMF executive board for the release of the next $600 million from a $3 billion rescue loan.

External Debt Restructuring Underway

Moreover, Ghana, a nation renowned for its gold, cocoa, and oil production, is concurrently engaging in discussions with overseas bondholders to restructure its more than $13 billion in international debt. Notable bondholders in this process include major global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein, and Neuberger Berman.

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