Finance Minister Ken Ofori-Atta, has revealed that Ghana has been able to secure the necessary assurances from China and France on securing a Memorandum of Outstanding (MoU) for the restructuring of Ghana’s external bilateral debts.
“We have met the Central Bank Governor of China and we don’t perceive any opposition or reluctance in participating positively when it comes to the Memorandum of Understanding on restructuring of our external bilateral debts” the Finance Minister said.
Mr Ofori-Atta revealed that “The Chinese government within the past months is close to reaching a similar deal with Zambia, Sri Lanka and Suriname, so following that trend, we expect some similar cooperation from them when it comes to Ghana”.
Answering questions from Journalists on the sidelines of the Annual International Monetary Fund/ World Bank meetings in Marrakesh, Morocco the Finance Minister noted that Ghana’s engagement under the G20 Common Framework has shown that it is working for countries with debt challenges and there are indeed mechanisms to restructure their debts.
“We have made tremendous progress under this framework compared to other countries on a similar path,” the Minister said.
Ghana’s IMF Programme and Securing Financing Assurance
Ghana, last week, reached a staff-level agreement in relation to the first programme review with the IMF.
This should pave the way for the IMF staff to forward Ghana’s report after the review to the board for approval and disbursement of the second tranche of $600 million under the IMF programme. But Ghana is first expected to secure a Memorandum of Understanding from the External Bilateral Creditors, a move needed to help the IMF Board approve the second tranche of funds for Ghana when it meets in the third week of November 2023.
But answering questions from Journalists in Marrakesh, Morocco on the sidelines of the Annual IMF/World Bank meetings, the Finance Minister noted that they will meet the deadline based on the engagements that they have had with the bilateral partners over the past weeks.
The Finance Minister was hopeful that expected stability for the economy will be achieved very soon, based on programmes that government is implementing and its firm commitment to be prudent with its expenditure going forward, especially when it comes to its fiscal operations in an election year.
JoyBusiness is learning that the World Bank will come on board with some $300 million to support the Ghana Financial Stability Fund, that is if Ghana is able to pass the first programme under the FUND programme. The Afreximbank will also come on board with some financial support, as well as some of the country’s donor partners.
Ghana’s External Debts
China and France are currently the Co-Chairs of the Official Creditor Committee that was formally established on 12th May, 2023, under the common framework for debt treatment.
Ghana’s Bilateral Lenders earlier this year formed what could be described as an official creditor committee that will negotiate with Ghana over possible restructuring of the country’s debts.
Government is looking at restructuring about 13 billion dollars in debts owed to these bilateral creditors.
China is said to be the biggest holder of external debts with about 1.7 billion dollars.
Finance Minister projects more than 2.5 percent growth rate for Ghana
The Finance Minister also disclosed that they governing is looking at growth hitting more than 2.5 percent by December 2023.
“The IMF expected Ghana to do averagely about 1.5 percent, but they have already indicated that they will be reviewing that projection going forward” and we believe that we are going to do better when it comes to the expansion of the economy”the Minister of Finance revealed.
He added “We are committed to instituting programmes that will help sustain the numbers that we are witnessing when it comes to growth.”
The Minister added that government will in all these, not leave out jobs, especially for the youth, as it will be rolling out some new programmes to help deal with issues of jobs for the youth.
On the rising Treasury Bills Rate, the Finance Minister noted “It is a real concern, but everything is being done to lower the rates.”
“Treasury Bills is always a battle between inflation and growth and I believe that the Bank of Ghana is taking measures to help deal with the challenge,” the Finance Minister added.
“Government is also working to ensure that some incentives are put in place as well resources when it comes to lending for the private sector,” Mr Ofori-Atta disclosed.
“The commentary on Ghana is positive and Ghana is fully committed to the IMF programme and staying on course even though some tough measures needed to be taken,” said the Minister.
Tax Exemptions and Concerns by IMF
In a recent report, the IMF expressed concerns about the tax breaks that the Ghanaian government is giving to businesses and investors, as well as the potential effects on the country’s economy and ability to raise revenue.
But responding to these concerns, the Minister of Finance noted that the bill to review these exemptions is currently before parliament for consideration and the government is fully committed to ensuring that these exemptions are granted to businesses that actually need them.
“Measures are also been taken to ensure that in taking these measures it doesn’t impact negatively on the economy and Foreign Direct Investment,” the Minister of Finance added.
Mr Ofori-Atta said this on the sideline of the press engagement at the ongoing IMF/World Bank Annual Meetings in Marrakesh.
Restructuring of Energy Sector debts
The Minister of Finance also disclosed that they have made significant progress when it comes to the energy sector debts as well as some reforms that Ghana needed to undertake as part of the IMF programme.
The Minister noted that “We are happy that IMF has also accepted our energy recovery programme as well.”
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