Ghana’s Finance Minister, Dr. Mohammed Amin Adam has advised that countries seeking to undertake a restructuring of their debts must first be willing to sacrifice at the national level.
The Minister of Finance believes the effect means countries facing similar fiscal crises like Ghana experienced and are contemplating debt restructuring are to first embark on internal sacrifices before any external negotiations.
Dr. Mohammed Amin Adam, who was speaking on the IMF Today Programme in Washington DC revealed that fair burden-sharing was a critical success factor in Ghana’s experience of Debt Restructuring.
He indicated that both the Domestic Debt Exchange Program and the External Debt Restructuring were overwhelmingly successful recording over 95% participation rate.
Ghana was able to restructure about US$17.5 billion of domestic debt which was very significant for the programme. On the external side, Ghana has completed a substantial restructuring of its Eurobond debt, covering $13 billion in liabilities with a strong 98% consent rate from bondholders.
Additionally, Ghana reached a Memorandum of Understanding (MoU) with its bilateral creditors, including China and France, to restructure $5.4 billion in debt, a crucial step for stabilizing its financial situation and achieving longer-term debt sustainability.
The Finance Minister says Ghana was able to achieve this success rate with its external creditors due to the national burden sharing it undertook with the domestic debt exchange.
With this experience, Dr. Amin Adam is calling on countries preparing to walk Ghana’s path to also emulate the sacrifices. This he believes will enable their external creditors to see their seriousness and soften their stance with them.
“The participation has been great and we see ourselves moving on the path to that sustainability. While we succeeded what other countries need to take into consideration in their restructuring is number one, what we call fair burden sharing. Because we had to do domestic debt exchange which you haven’t seen many countries do. We had to do that first to demonstrate our ability and our capacity to sacrifice,” he indicated.
Commenting further, he said: : The sacrifice of our people in biting part of the bullet before we went out to do the external debt restructuring. And so because of that the bilateral creditors as well as our Euro bondholders saw Ghana’s seriousness and readiness to change.”
Ghana aims to restore fiscal stability through the debt restructuring programme. The country seeks to bring down the debt-to-GDP ratio to 55% by 2028.
