Ghana agrees to restructure $5.4 billion in debt with new MoU

Ghana has signed a memorandum of understanding (MoU) with bilateral creditors, including China and France, to restructure $5.4 billion of debt. This agreement is crucial for securing $360 million from the International Monetary Fund (IMF) as part of Ghana’s $3 billion bailout program expected next month. The MoU outlines a framework for restructuring loans from official creditors, following a Paris Club agreement in January.

During the pandemic, Ghana defaulted on most of its $30 billion external debt. Since then, inflation has fallen from 54.1% in December 2022 to 25% in April 2024, with GDP growth reaching 2.9% in 2023. The IMF has declared Ghana’s debt unsustainable and aims to reduce the public debt-to-GDP ratio from 88.1% in 2022 to 55% by 2028. Terms agreed with official creditors are essential for bondholders seeking equitable treatment under the G20 Common Framework for debt restructuring.

In October, Ghana completed a domestic debt restructuring, saving 61 billion Ghanaian cedis ($17.5 billion). The government is continuing its efforts to meet IMF requirements for its debt restructuring program. The debt-restructuring agreement and the expected IMF funds are vital steps towards stabilizing Ghana’s economy and reducing its debt burden.