Ghana Seeks Japan’s Support to Secure IMF Deal as EIU Anticipates Debt Restructuring in 2023-24

Ghana’s President Akufo-Addo is seeking Japan’s assistance to reach an agreement with the International Monetary Fund (IMF) Board for the remaining $3 billion balance of payment support. Japan, a member of the Paris Club, has the potential to play a crucial role in ensuring Ghana receives the IMF deal.

In a meeting with the Japanese Prime Minister, Fumio Kishida, President Akufo-Addo expressed his gratitude to Japan and promised to repay their support.

Ghana requested a three-year, $3bn extended credit facility (ECF) from the IMF in July 2022. An agreement was reached in December 2022, aimed at restoring investor confidence, building reserve buffers, and improving fiscal and debt sustainability. However, before the IMF’s Executive Board can approve the ECF, Ghana must first agree on debt restructuring with its external creditors.

The Economic Intelligence Unit (EIU) anticipates that Ghana will secure restructuring agreements on its public external debt involving official and private creditors in 2023-24. While the conclusion of a domestic debt-swap operation in February and increasing international attention on speeding up external debt restructurings are expected to reduce Ghana’s risk of debt distress, the EIU warns of prolonged external debt-restructuring negotiations that could delay IMF board approval.

The EIU’s 2023 Country Report on Ghana highlights the pressing macroeconomic crisis in the country, making IMF approval crucial. The report suggests that the IMF program will be approved by mid-2023. However, there is a material risk that prolonged external debt-restructuring negotiations, involving multiple stakeholders, could delay IMF board approval.

For the most part, Ghana is counting on Japan’s support to ensure the IMF deal goes through, paving the way for a robust recovery of Ghana’s economy. The government must prioritize securing debt-restructuring agreements with external creditors to increase the chances of IMF board approval. It is imperative for the country’s economy to reach a favorable agreement with the IMF and regain investor confidence.

Source: Ghanaweb.