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A major step forward for Ghana’s economic recovery has been announced by President of the Republic Nana Addo Dankwa Akufo-Addo, who stated that the successful negotiations on the debt restructuring will allow many of the nation’s halted projects to soon resume.
Speaking during the Jubilee House credential ceremony for nine recently appointed diplomats, the President spoke over the fruitful results of these discussions and how they will affect Ghana’s growth.
The restructuring of debt by domestic bondholders, debt by bilateral foreign parties, and debt by domestic bondholders was completed, according to the President’s summary.
A fresh emphasis on important infrastructure and development projects has been made possible by these initiatives, which have also brought much-needed financial relief.
“These agreements have provided much-needed breathing space and put our domestic debt-to-GDP ratio on a clear downward trend,” President Akufo-Addo explained.
“The successful negotiations mean that bondholders will provide $4.4 billion in cash flow relief during the IMF Programme, in addition to the cancellation of $4.7 billion of the debt stock.”
The President emphasized the importance of the successful domestic debt restructuring, which saw over 95% of participants.
The average coupon rate was lowered from 21% to 9%, and maturities were prolonged. This alleviated the short-term municipal debt service load, which was previously responsible for over 40% of the nation’s tax income.
By the end of 2028, the domestic debt-to-GDP ratio is expected to have reached 55% thanks to this restructuring. Furthermore, a significant turning point in Ghana’s attempts to revive its economy has been the external bilateral debt restructuring.
$5.1 billion of Ghana’s debts were restructured as a result of the agreement with bilateral creditors, which was arranged through the Ghana Official Creditor Committee (OCC) and co-chaired by France and China.
This agreement is expected to provide a cash flow relief of approximately $2.8 billion, or GH¢39 billion, in debt service, postponed between 2023 and 2026 to be repaid later at a cheaper interest rate.
“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 stated. “This will enable us to resume and complete many projects that are vital for our nation’s progress.”
The successful negotiations have also paved the way for the IMF’s Executive Board to convene and approve Ghana’s Second Review of the Fund Programme, resulting in a further disbursement of $360 million in support of the programme. This additional funding will further bolster Ghana’s efforts to revive its economy and accelerate development initiatives.
One of the most notable achievements in the debt restructuring process is the agreement with commercial bondholders. The restructuring of $13.1 billion of debts resulted in significant savings for the government, including the cancellation of $4.7 billion, or GH¢65 billion, from the debt stock. Additionally, Ghana will save $4.4 billion, or GH¢60 billion, in debt service, providing further financial 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,” President Akufo-Addo explained. “This comprises principal savings of $1.5 billion and interest savings of $2.9 billion.”
The President commended the Ministry of Finance, led by Hon. Mohammed Amin Adam, for their efforts in achieving these historic agreements. He emphasized the importance of these milestones in creating the financial space needed to resume and complete stalled projects across the country.
“These achievements are unprecedented in the history of country debt restructurings,” President Akufo-Addo stated. “The Minister for Finance and his team at the Ministry of Finance are to be warmly applauded for this historic achievement.”
Now that the government has successfully implemented debt restructuring plans, it can concentrate on reviving important development and infrastructure projects that have been put on hold because of budgetary limitations. These initiatives, which include upgrades to transportation, healthcare, education, and other critical areas, are fundamental to Ghana’s advancement and growth.
Rekindled confidence and hope for Ghana’s economic future have greeted the President’s announcement. Restarting projects that have been put on hold will help Ghana achieve its development goals, create jobs, and raise the standard of living for its people.
The successful debt restructuring and the restart of projects that had been put on hold represent a major step forward in Ghana’s road to sustainable growth and prosperity as the country continues its economic recovery.
Source: Ghanatodayonline.com
