The International Monetary Fund Chief, Kristalina Georgieva has told the Ghanaian President, Nana Akufo-Addo that Ghana should make sure the debt relief deal it negotiates with commercial creditors do not undermine the country’s efforts to recover from its economic crisis.
The comments were made recently in a private meeting during Georgieva’s visit to the West African second largest economy, whose economy is recovering from its worst crisis in a generation after it defaulted on most of its external debt in December 2022.
While the Bretton Woods institution plays a key role in advising countries on how to get their debt back onto a sustainable footing, it usually does not comment publicly on the debt restructuring process.
In January 2024, Ghana reached a deal in principle to restructure $5.4 billion of loans with official creditors, including China and France.
Its efforts to overhaul $13 billion in international bonds have also potentially hit the home stretch: International bondholders entered into non-disclosure agreements (NDAs) with the government last week, a step marking the start of formal talks to restructure.
Georgieva said Ghana had to strike a fair deal or else risk facing a scenario akin to Zambia.
Zambia, a southern African country became the first African country to default in the COVID-19 era.
In late 2020, Zambia has seen its restructuring process beset by setbacks.
Late last year, a deal Zambia struck with its bondholders was thwarted by official creditors’ objections on the grounds that it did not offer comparable debt relief to theirs – a major setback.
Georgieva added that Zambia’s bondholders had secured a better deal than official creditors, including China, which had subsequently blocked the deal in November 2023.
