In a major stride towards economic recovery, President Nana Addo Dankwa Akufo-Addo has announced the imminent resumption of many stalled projects across Ghana. This development follows successful negotiations on the restructuring of the nation’s debt.
During a ceremony at Jubilee House to present credentials to nine newly appointed diplomats, President Akufo-Addo highlighted the positive outcomes of these negotiations and their critical impact on Ghana’s development.
The President detailed the completion of three significant debt restructuring operations: domestic debt restructuring, external bilateral debt restructuring, and commercial bondholders debt restructuring. These efforts have brought essential financial relief, enabling a renewed focus on key infrastructure and development projects.
“These agreements have provided much-needed breathing space and put our domestic debt-to-GDP ratio on a clear downward trend,” stated President Akufo-Addo. He emphasized that bondholders will offer $4.4 billion in cash flow relief during the IMF Programme, alongside the cancellation of $4.7 billion of the debt stock.
A key highlight of the domestic debt restructuring was its high participation rate of almost 95%. Coupon rates were reduced from 21% to 9% on average, and maturities were extended, easing the near-term local debt service burden that previously consumed over 40% of the country’s tax revenues. This restructuring is set to lower the domestic debt-to-GDP ratio to 55% by 2028.
Furthermore, the external bilateral debt restructuring marked a crucial milestone. The agreement with bilateral creditors, coordinated through the Ghana Official Creditor Committee (OCC) and co-chaired by France and China, restructured $5.1 billion of Ghana’s debts. This will provide approximately $2.8 billion (GH¢39 billion) in debt service relief from 2023 to 2026, allowing for repayment at a cheaper interest rate later.
“The Agreement with our Bilateral Debt Holders will lead to a cash flow relief of around $2.8 billion or GH¢39 billion in debt service,” President Akufo-Addo remarked. “This will enable us to resume and complete many projects that are vital for our nation’s progress.”
These successful negotiations have cleared the path for the IMF’s Executive Board to approve Ghana’s Second Review of the Fund Programme, resulting in a further disbursement of $360 million. This additional funding will bolster Ghana’s efforts to revive its economy and accelerate development initiatives.
One of the most notable achievements is the agreement with commercial bondholders. The restructuring of $13.1 billion in debts resulted in significant savings, including the cancellation of $4.7 billion (GH¢65 billion) from the debt stock and $4.4 billion (GH¢60 billion) in debt service relief during the IMF Programme.
“The savings include the cancellation of $4.7 billion from the debt stock and $4.4 billion in cash flow relief during the IMF Programme,” explained President Akufo-Addo. “This comprises principal savings of $1.5 billion and interest savings of $2.9 billion.”
The President praised the Ministry of Finance, led by Hon. Mohammed Amin Adam, for their efforts in achieving these historic agreements. He stressed the importance of these milestones in creating the financial space needed to resume and complete stalled projects nationwide.
“These achievements are unprecedented in the history of country debt restructurings,” President Akufo-Addo noted. “The Minister for Finance and his team at the Ministry of Finance are to be warmly applauded for this historic achievement.”
With the successful debt restructuring initiatives in place, the government is now well-positioned to revitalize critical infrastructure and development projects that were previously stalled due to financial constraints. These projects, including improvements in healthcare, education, transportation, and other essential sectors, are vital for Ghana’s progress and development.
The President’s announcement has been met with optimism and renewed hope for Ghana’s economic future. The resumption of stalled projects will not only boost the country’s development efforts but also create jobs and improve the quality of life for Ghanaians.
As Ghana continues on its path to economic recovery, the successful debt restructuring and the resumption of stalled projects signify a significant step forward in the nation’s journey towards sustainable growth and prosperity.
