The International Monetary Fund’s executive board on Wednesday approved a $3 billion, three-year loan program for Ghana, allowing for an immediate disbursement of about $600 million and a potential path out of the West African country’s worst economic crisis in a generation.
The IMF said in a statement that securing timely debt restructuring agreements with external creditors would be essential to successfully implement the Extended Credit Facility loan aimed at helping Ghana overcome immediate policy and financing challenges.
The Fund also said the new loan would help mobilize additional external financing from development partners and provided a framework for completing its debt restructuring.
“Congratulations to Ghana for a strong program of reforms to revitalize growth and reduce the country’s debt burden,” IMF Managing Director Kristalina Georgieva said in a video posted to Twitter.
Georgieva said the commitment by official bilateral creditors to help make Ghana’s debt sustainable signals important progress for the long-stalled G20 common framework for developing country debt relief.
Sources familiar with Ghana’s new program cautioned that authorities there faced long negotiations with creditors, pointing to Zambia, where a similar process has been mired in delays.
Zambia, the first African country to default in the COVID-19 era, secured an IMF loan in September 2022 and still has not agreed debt restructuring terms with creditors.
Analysts expect Ghana’s process to be faster and smoother since China holds a smaller proportion of Ghana’s debt. China is Zambia’s largest bilateral creditor and has been accused of delaying that country’s debt restructuring, which it denies.
