Africa

An IMF official claims that Ghana will deal with bondholders “a matter of time”

An IMF official claims that Ghana will deal with bondholders "a matter of time"
IMF African Department Director Abebe Aemro Selassie listens to a question during an interview with Reuters at the annual meeting of the International Monetary Fund and the World Bank, in Marrakech, Morocco October 9, 2023. REUTERS/Susana Vera

An IMF official stated that Ghana’s agreement to restructure with holders of its foreign bonds is “a matter of time” rather than that there are immovable obstacles. The fund had previously stated that a previous planned deal would not meet its requirements.

Director of the African Department Abebe Selassie stated, “It depends on… how much time and intensity the government is going to be able to devote to (bondholder negotiations) in the coming weeks,” during a radio interview at the International Monetary Fund (IMF) Spring Meetings in Washington.

“It’s a matter of time rather than something pretty fundamental blocking it.”
The nation that produced oil, gold, and cocoa turned to the IMF for financial assistance in 2022 after defaulting on the majority of its $30 billion in external debt at the end of the year due to debt payments and skyrocketing inflation.

READ ALSO: Over a port deal, Somalia recalls Ethiopia’s ambassador, according to officials

In order to access more IMF funds, Ghana needs to sign a Memorandum of Understanding (Mou) with its formal bilateral creditors. Selassie made this announcement during a separate press event on Friday.

“We’re optimistic that it will occur within the next few weeks. Both the drafting and the talks are moving along quite well. Stephane Roudet, the IMF Mission Chief for Ghana, told reporters separately, “I don’t think there will be dragging.”

“We were pleasantly surprised by the economic growth… In 2024, we’ll update growth upward,” he continued.
This week, Ghana’s government said that negotiations will go on until a solution that complies with the IMF’s debt-sustainability goals, after failing to come to a feasible restructuring arrangement with two groups of holders of approximately $13 billion in foreign bonds.

READ MORE:  The Nigerian army frees kidnapped students from Kaduna

Separately, a bondholder stated that although the first program review’s negotiation details were disclosed in violation of the fund’s debt sustainability study, there was optimism that the second program review, which concluded last week, would provide better results.

The bondholder stated, “We’re solving for the second review,” asking to stay anonymous because of how delicate the discussions were. “We’re much closer than it appears.”

The IMF said last week that, if Ghana and its official bilateral creditors established an agreement in line with the program, a new staff-level agreement on the second review of the $3 billion loan program with Ghana would unlock a $360 million tranche.

Selassie reiterated in the interview the fund’s stance that the board approval of the subsequent loan release did not additionally require a bondholder settlement.

“We hope to see talks taking place at the government level. “It won’t prevent us from going to the board,” he stated.

“Debt restructurings are always difficult, even in countries where you don’t have this very complex creditor mix,” Selassie stated.

“But even with that, I want to be really clear: things are moving very swiftly (for Ghana) by historical standards. However, that is insufficient; we need deals to close much more quickly.”

Editing by Hugh Lawson and Andrew Cawthorne, editing by Rachel Savage; reporting by Maxwell Akalaare Adombila and Karin Strohecker, with additional reporting from Nellie Peyton in Johannesburg and Rodrigo Campos in New York

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button