Ghana has signed a memorandum of understanding (MoU) with its bilateral creditors, including China and France, to restructure $5.4 billion of debt.
- The MoU provides a framework for restructuring loans from official creditors, following an agreement by the Paris Club in January.
- The MoU paves way for the executive board of the International Monetary Fund (IMF) to approve the disbursement of $360 million under Ghana’s $3 billion, three-year bailout programme, which is expected next month.
- The IMF declared Ghana’s debt unsustainable in its Debt Sustainability Analysis (DSA) and is aiming for the country to restore itself to a “moderate” risk of debt distress by 2028. This would bring Ghana’s public debt-to-GDP ratio from 88.1 per cent at the end of 2022 to 55 per cent by 2028.
“The country concluded a domestic debt restructuring in October, during which 206 billion Ghanaian cedi ($17.5 billion) was swapped for longer-dated, lower-interest debt, resulting in 61 billion Ghanaian cedi of savings,” then Finance Minister Ken Ofori-Atta said.
Ghana was the second country in Africa after Zambia to default on most of its $30 billion external debt during the pandemic as the exporter of gold, cocoa and oil battled to emerge from its worst economic crisis in a generation.
In April 2024, Ghana’s headline annual inflation rate declined to 25.0% due to base effects and lower food inflation. This is a steep decline from 41.2% in April 2023, and from 25.8% in March 2024, but still well above the central bank’s target band of 6% to 10%.
The mild deceleration was mainly due to a favorable base effect from last year, as the local currency remained under pressure. The cedi has depreciated nearly 14% against the US dollar so far this year, pressured by a stronger dollar and a decline in cocoa output, as well as delays in debt restructuring.
Food inflation dropped to 26.8% in April from 29.6% in March, while non-food prices accelerated to 23.5% from 22.6% in March, boosted by higher transportation costs. On a monthly basis, the CPI rose by 1.8% in April.
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