The growth in Ghana’s Gross Domestic Product (GDP) and the successful debt negotiations give meaning to the statement made by PresidentNana Addo Dankwa Akufo-Addo during the Covid period that ‘we know how to bring back the economy’, the Director of Communications of the New Patriotic Party (NPP), Richard Ahiagbah has said.
Mr Ahiagbah said that the government’s strategic approach to managing the economy during these challenging times has been validated by the successful debt negotiations.
He says that the foresight and leadership displayed have not only brought immediate relief but also laid a solid foundation for sustainable economic growth.
In a statement, he said “Ghana’s economy is on track for a strong and resilient resurgence. In recent debt negotiations, the government successfully secured the cancellation or deferral of $15 billion (GH¢225 billion) in principal and interest on external debts, while also saving an impressive $4.7 billion in debt cancellation on our Eurobonds. This remarkable achievement underscores the resilience and determination of both the government and the people of Ghana in overcoming the challenges posed by the pandemic and the Russia-Ukraine war.
“Do you recall President Akufo-Addo’s statement that we know how to bring back the economy? The economy is indeed coming back, and Ghanaians have every reason to be happy about the recovery. The government’s strategic approach to managing the economy during these challenging times has been validated by these successful debt negotiations. The foresight and leadership displayed have not only brought immediate relief but also laid a solid foundation for sustainable economic growth.
“Ghanaians have faced unprecedented challenges over the past few years. The COVID-19 pandemic and the Russia-Ukraine war have had severe impacts on economies worldwide, and Ghana has not been an exception. Despite these adversities, our government has remained steadfast, implementing policies and measures to stabilize and revitalize our economy. The results of these efforts are now evident in the significant debt relief secured, which will free up resources for vital investments in infrastructure, healthcare, education, and other critical sectors. This success is a testament to the government’s commitment to ensuring the well-being and prosperity of all Ghanaians. It reflects our ability to navigate complex global financial landscapes and emerge stronger. The international community’s confidence in Ghana’s economic management is clear, as evidenced by the willingness of our creditors to support our recovery efforts.
“As we move forward, let us all take pride in our collective achievements and remain committed to working together for the continued progress and development of our nation. The road ahead is promising, and with continued resilience and unity, we can achieve even greater heights. Ghana’s future is bright, and our economy is on the path to a robust recovery. Let us celebrate this milestone and look forward to a prosperous future for our beloved country.”
Three major debt restructuring operations, domestic debt restructuring, external bilateral debt restructuring, and commercial bondholders debt restructuring have been successfully completed.
Commenting on this , President Nana Addo Dankwa Akufo-Addo said while sthat many of the country’s stalled projects will soon resume, thanks to successful negotiations on the restructuring of Ghana’s debt.
The President detailed the positive outcomes of these negotiations and their implications for Ghana’s development.
He said that these efforts have provided much-needed financial relief and set the stage for a renewed focus on critical infrastructure and development projects.
“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 highlighted the significance of the domestic debt restructuring, which achieved a high participation rate of almost 95%. Coupon rates were reduced from 21% to 9% on average, and maturities were extended, easing the near-term local debt service burden that previously consumed more than 40% of the country’s tax revenues.
This restructuring has set the domestic debt-to-GDP ratio on a path to reach 55% by the end of 2028. Furthermore, the external bilateral debt restructuring has been a crucial milestone in Ghana’s economic recovery efforts.
The agreement with bilateral creditors, coordinated through the Ghana Official Creditor Committee (OCC) and co-chaired by France and China, resulted in the restructuring of $5.1 billion of Ghana’s debts.
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.”
With the successful debt restructuring initiatives in place, the government is now well-positioned to focus on revitalizing critical infrastructure and development projects that have been stalled due to financial constraints. These projects, which include improvements in healthcare, education, transportation, and other essential sectors, are vital for Ghana’s progress and development.
The President’s announcement has been met with optimism and renewed hope for Ghana’s economic future. The resumption of stalled projects will not only boost the country’s development efforts but also create jobs and improve the quality of life for Ghanaians.
As Ghana continues on its path to economic recovery, the successful debt restructuring and the resumption of stalled projects signify a significant step forward in the nation’s journey towards sustainable growth and prosperity.
