Ghanaian President Nana Akufo-Addo defended borrowing that’s sparked a debt crisis and called for expedited creditor talks to qualify for a $3 billion bailout from the International Monetary Fund.
(Bloomberg) — Ghanaian President Nana Akufo-Addo defended borrowing that’s sparked a debt crisis and called for expedited creditor talks to qualify for a $3 billion bailout from the International Monetary Fund.
Akufo-Addo listed agriculture, health, education, roads, tourism, and digitization initiatives as areas that benefitted from funds borrowed under his administration.
Ghana is now working to restructure about $30 billion of public debt, which reached an estimated 105% of gross domestic product in 2022, according to the IMF.
“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.
The cedi strengthened 1.7% to 12.25 against the dollar at 3:34 p.m. in Accra, its strongest level in about a month.
Ghana, which has already reorganized 87.8 billion cedis ($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, making it easier for low-income countries to restructure their debt.
The West African nation, which started separate discussions with China to avoid being caught up in prolonged talks like 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 the People’s Republic of China for the cooperation they have so far exhibited to us in attempting to reach an agreement,” and 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 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, which secured an IMF staff-level agreement in December, is also putting in place fiscal adjustments and structural reforms, he said.
–With assistance from Moses Mozart Dzawu and Ekow Dontoh.
(Updates with market reaction in fourth paragraph)
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