Ghana and IMF agree second loan payment

Ghana has successfully completed debt restructuring with external creditors, a crucial step in its $3 billion IMF credit arrangement, amid an economic crisis.

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FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo

Ghana has successfully concluded negotiations with external creditors for a vital debt restructuring, a crucial component of its $3 billion credit arrangement with the International Monetary Fund (IMF), as confirmed by both the government and the lending institution during the weekend.

In response to its most severe economic crisis in decades, Ghana sought assistance from the IMF to bolster its public finances and enhance the management of its substantial debt burden.

The economic trajectory of Ghana is poised to play a significant role in the upcoming presidential election in December.

Ghana received its first $600 million tranche of the IMF loan in May last year.

The external debt deal helps clear the way for approval of another $600 million payment.

The Finance Ministry released a statement affirming that this development marks a significant and positive stride towards reinstating Ghana’s long-term debt sustainability. In 2023, Ghana executed a restructuring of its domestic debt. Faced with challenges in addressing a substantial balance of payments deficit, Ghana took the unprecedented step of suspending payments on the majority of its external debt, essentially defaulting.

The restructuring efforts encompassed a broad spectrum, including both bilateral and commercial debt, as well as Eurobonds.

However, the Ghanaians are not happy about how the current government and the president are tackling the economic crisis. Ghana’s youth unemployment rate is at an all-time high, almost three times higher than in 2010. Sanitation is also a huge problem for the normal people. According to UNICEF, there is still no urban sanitation strategy in Ghana, meaning that various efforts to improve sanitation aren’t being effectively monitored or coordinated. The capital, Accra, continues to battle annual floods which affect lives, health, properties, and businesses.

Some are highlighting corruption in Ghana’s police service as an important issue. A survey, released in July 2023 by the Ghana Statistical Service, named the Ghana Police Service as the most corrupt institution in Ghana.

Also, one year ago, around 3.4 million people in Ghana were living in extreme poverty, meaning on less than $1.90 a day, and the vast majority of these live in the country’s rural areas.

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