Inability to reach debt deal with int’l bondholders was not a failure – Finance Ministry

The Finance Ministry has said the inability to reach an agreement with the international bondholders was not a failure on the part of the government.

Ghana was unable to secure a workable debt deal with two bondholder groups in its push to restructure $13 billion of international bonds.

In a Question & Answer session on its X platform, the Finance Ministry said “No, that is not a failure but part of the ongoing process to arrive at an agreement in consistent with the debt threshold under the Debt Sustainability Analysis (DSA).

We are regrouping to continue our negotiations toward reaching an agreement on final terms that are consistent with IMF debt sustainability targets.

The sector Minister Dr Mohammed Amin Adam announced that Ghana and international bondholders have reached an interim deal.

But, he said, the agreement must still be tweaked to meet International Monetary Fund (IMF) debt sustainability targets.

“We will therefore regroup to continue negotiations until we reach a deal that is consistent with IMF debt sustainability targets,” he wrote on X platform, on Monday.

The Finance Minister had announced earlier on Monday, April 15 that Ghana was unable to secure a workable debt deal with two bondholder groups in its push to restructure $13 billion of international bonds.

Reuters reported that formal talks were on hold for now after the International Monetary Fund indicated that the deal would not fit its debt sustainability parameters.

The IMF Mission Chief for Ghana, Mr.

Stéphane Roudet, had said that they were awaiting Ghana to reach an agreement with external creditors to enable the Board to review the staff-level agreement that has been reached as part of the process to release the third tranche.

 

The IMF staff and the Ghanaian authorities had reached a staff-level agreement on the second review of Ghana’s economic program under the Extended Credit Facility arrangement.

This staff-level agreement is subject to IMF Management approval and Executive Board consideration once the necessary financing assurances have been received.

Mr Roudet said at a joint Press IMF, Ministry of Finance, Bank of Ghana press conference in Accra on Saturday, April 13 that an agreement between the Ghanaian authorities and their official creditors on an MoU for a debt treatment in line with programme parameters, would provide the needed financing assurances.

Upon completion of the Executive Board review, he said, Ghana would have access to US$ 360 million, bringing the total IMF financial support disbursed under the arrangement since May 2023 to US$ 1,560 million.

“Performance under the IMF-supported program has been generally strong, with most quantitative targets met.

Monetary policy has remained appropriately tight, allowing for inflation to decline rapidly.

“On the fiscal front, consistent with the authorities’ commitments under the IMF-supported program, the fiscal primary balance on a commitment basis improved by over 4 percentage points of GDP in 2023 and is on track to achieve a fiscal primary surplus of ½ percent of GDP in 2024.

An agreement between the Ghanaian authorities and their official creditors on an MoU for a debt treatment in line with program parameters, would provide the needed financing assurances.

Monetary policy has remained appropriately tight, allowing for inflation to decline rapidly.

 

“On the fiscal front, consistent with the authorities’ commitments under the IMF-supported program, the fiscal primary balance on a commitment basis improved by over 4 percentage points of GDP in 2023 and is on track to achieve a fiscal primary surplus of ½ percent of GDP in 2024.

Financial stability has been preserved, with banks posting solid profits in 2023.

“Given Ghana’s strong progress under the IMF-supported program, the next key step for the country is to reach an agreement with its official bilateral creditors on an MoU consistent with the .