IMF and Ghana to reach staff-level agreement by Tuesday

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Accra, Dec. 10, 2022 – (Reuters/GBN) The International Monetary Fund (IMF) and Ghana are expected to reach a staff-level agreement on a loan deal by Tuesday at the latest, said three sources with knowledge of the ongoing talks.

The IMF did not respond to a request for comment, but a spokesperson for Ghana’s finance ministry said they could not comment beyond that the negotiations were ongoing.

Two sources said that the IMF programme was expected to be an extended credit facility, which would provides financial assistance to countries with drawn out balance of payments issues.

One of those sources and a third source said that major hurdles in the negotiations were overcome this week which had sped up the process.

Ghana turned to the IMF for help in July, and an IMF team is currently in the country until Tuesday.

Finance Minister Kenneth Ofori-Atta has said he was hoping for a relief package of up to $3 billion, possibly over a three-year period, as the West African country faces its worst economic crisis in a generation.

The cocoa, gold, and oil-producing West African nation has said it needed the deal by the end of the year.

The government has begun restructuring its debt this week by rolling out a plan to swap $10.5 billion in local bonds for new ones.

If a domestic debt rework is “done in a coherent manner, with the support of the IMF and the local banking system, the country will be in a significantly better position because it addresses the near term external liquidity challenges,” said Carmen Altenkirch, Aviva Investors emerging markets sovereign analyst.

The government has not yet announced plans for a foreign debt restructuring. Creditors are getting ready though, with two sources telling Reuters a steering committee of dollar debt holders will be announced next week.

One source close to the matter said that the conditions for an external debt restructuring were the final hurdle and that an agreement was expected to be reached on Friday.

“After December 2020, Ghana’s government did not go to the IMF and did not slash budget expenditure,” said Charlie Robertson, global chief economist at Renaissance Capital. “Then higher global borrowing costs in 2022 were the catalyst for its default on domestic debt.”

Ghana’s international bonds were broadly unchanged on Friday with most issues trading at deeply distressed levels of 30-35 cents in the dollar, data from Refinitiv showed. (GBN)

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