Ghanaian President Nana Akufo-Addo defended borrowing that’s plunged the economy into a debt crisis and called for expedited bilateral creditor talks so the country can meet requirements for a $3 billion bailout from the International Monetary Fund.
(Bloomberg) — Ghanaian President Nana Akufo-Addo defended borrowing that’s plunged the economy into a debt crisis and called for expedited bilateral creditor talks so the country can meet requirements for a $3 billion bailout from the International Monetary Fund.
Akufo-Addo listed agriculture, health, education, roads, tourism, and digitization initiatives as industries that benefitted from funds borrowed under his administration. Ghana is working to restructure about $30 billion of public loans to reduce a debt-to-gross-domestic-product that the IMF estimates at 105% in 2022.
“Let me state emphatically: we have not been reckless in borrowing,” Akufo-Addo said Wednesday in his state of the nation address to parliament in the capital, Accra.
Ghana, which has already reorganized $7.1 billion of domestic debt, missed a self-imposed deadline to reach an agreement on bilateral debt by the end of February under the Group of 20 Common Framework. The mechanism was meant to expand the Paris Club of sovereign creditors to include China and other lender nations in a bid to restructure the debt of low-income countries.
The West African nation, which started separate discussions with China to further avoid delays to talks such as those faced by Zambia and Sri Lanka, seeks to reduce its debt-to-GDP ratio to 55% by 2028.
“I want to express our appreciation to the Paris Club countries and People’s Republic of China for the cooperation they have so far exhibited to us in attempting to reach an agreement in their attempt to establish an official creditor committee,” said Akufo-Addo, who’s in the second half of his final constitutional term as president.
“We look forward to their fast-tracking the needed financing assurances for IMF approval,” he said.
Commercial creditors such as Blackrock and Allianz are waiting for the outcome of bilateral talks before starting their own negotiations with Ghana over as much as $13 billion of bonds.
The country, which is also putting in place fiscal adjustments and structural reforms, is on track to present its request for the $3 billion loan program to the IMF’s executive board by the end of March, said Akufo-Addo. Ghana secured an IMF staff-level agreement in December.
–With assistance from Moses Mozart Dzawu and Ekow Dontoh.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.