Ghana Approves $2.8 Billion Debt Deal with Creditors to Unlock IMF Support

Ghana’s parliament has unanimously approved a landmark $2.8 billion debt restructuring agreement with a coalition of 25 official creditor nations, a pivotal step toward stabilising the country’s economy and unlocking further disbursements under its $3 billion IMF bailout programme.

The deal includes major global creditors such as China, France, the United States, Germany, and the United Kingdom, reflecting strong international support for Ghana’s efforts to recover from its worst economic crisis in a generation.

Key Details of the Deal

• Debt service relief: $2.8 billion between 2023 and 2026

• Rescheduled repayments: Pushed to 2039–2043, offering a 15+ year grace period

• Interest rates: Set between 1% and 3%, well below market levels

• Objective: Reduce debt-to-GDP to 55% and debt service-to-revenue below 18% by 2028

The agreement follows Ghana’s default on most of its $30 billion external debt in December 2022, amid spiralling inflation, collapsing currency, and soaring borrowing costs exacerbated by global economic shocks.

“A Critical Milestone” — Parliament’s View

A parliamentary report hailed the restructuring as “critical in supporting government to restore and sustain macroeconomic stability and debt sustainability.”

President John Mahama’s administration views the approval as a strategic breakthrough, enabling continued access to IMF resources and bolstering investor confidence. However, the restructuring is not yet fully finalised: bilateral ratifications are still pending, and talks with private and commercial creditors remain unresolved.

IMF Programme: Lifeline with Strings

The International Monetary Fund’s three-year, $3 billion Extended Credit Facility, approved in May 2023, has been instrumental in stabilising Ghana’s currency and helping reduce inflation from 50% to around 23%. However, the programme demands significant fiscal consolidation, transparency in debt management, and structural reforms in tax, energy, and public finance.

Failure to meet reform targets could threaten future IMF disbursements. US lawmakers, for instance, are pressing Ghana to settle $251 million owed to American companies, adding pressure to prioritise arrears settlement.

Private Creditors: The Next Frontier

Ghana has reached a tentative agreement with Eurobond holders, achieving a 37% haircut on $13 billion in debt and securing $4.4 billion in cash-flow relief. Yet, challenges persist:

• Some bondholders remain holdouts.

• Afreximbank and other commercial lenders resist being grouped under “private creditors,” seeking preferential treatment.

• Power producers with unpaid arrears are pushing back, raising the risk of power supply disruptions if not accommodated.

Ghana parliament

Ghana parliament

How Did Ghana Get Here?

Ghana’s crisis stems from a toxic mix of:

• COVID-19 revenue losses

• Soaring global interest rates

• The Ukraine war’s impact on food and fuel prices

• Excessive domestic borrowing and fiscal mismanagement

By mid-2023, Ghana’s total public debt had ballooned to over $52 billion, with nearly half owed domestically. Heavy reliance on short-term treasury bills created unsustainable refinancing risks, compounding the crisis.

What’s Next for Ghana’s Economy?

While recent data show quarterly GDP growth of 6.9% and declining inflation, annual growth remains weak, and living costs are still high. The government must now:

• Finalise bilateral agreements with creditors

• Conclude talks with private and commercial lenders

• Implement structural reforms under IMF oversight

• Resolve disputes such as the $768 million owed to Afreximbank

“Ghana’s patchwork of debt deals is proceeding steadily,” says Bright Simons, Vice President of think tank IMANI Africa. “But the real test will be sustaining momentum through deep and credible reform.”

Simons warns that investor optimism has already priced in many of the debt gains, and that future progress depends on delivering meaningful change in governance, energy reform, and public financial management.

Why This Matters for Africa and Beyond

Ghana’s restructuring could serve as a template for other African nations facing debt distress. The deal underscores the growing role of multilateral cooperation in addressing debt burdens in the Global South.

At the same time, Ghana’s experience highlights the limitations of short-term relief in the absence of long-term economic restructuring and domestic revenue mobilisation.

Editor’s Note:
Ghana’s path from default to stability is far from over. Yet this restructuring deal marks a critical point in its journey—one shaped not only by diplomacy and debt negotiations, but also by the courage to reform from within. For the sake of its people and the region, Ghana must now convert relief into resilience.