Finance Minister Dr. Mohammed Amin Adam has credited Ghana’s decision to restructure its domestic debt before engaging external creditors as the major factor behind the country’s swift debt restructuring process. Speaking on “IMF Today,” a live broadcast at the ongoing IMF-World Bank Group 2024 Annual Meetings, Dr. Adam highlighted that Ghana completed its debt restructuring in just nine months, compared to the two years it typically takes other countries to achieve the same feat.
He explained that starting with domestic debt restructuring, which many countries avoid, helped ensure a fair distribution of the burden and demonstrated the government’s commitment to reviving the economy. “Because of that, the bilateral creditors as well as our Eurobond holders saw Ghana’s seriousness and readiness to change by first of all restructuring our domestic debt before coming to them, so that brought them closer to us and that helped with the negotiations. You cannot go to your creditors and ask them for relief when you are not restructuring your own domestic debt to put your house in order,” he stated.
Dr. Adam also emphasized that the simplicity of Ghana’s debt restructuring plan contributed to the quick resolution. By focusing on restructuring the principals and coupons, rather than engaging in complex state-contingent instruments, the process was significantly expedited. Transparency, he added, was another key factor. The government was open with creditors, providing all requested information, and committed to publishing its debt levels quarterly to ensure ongoing transparency.
Looking forward, Dr. Adam assured that measures such as a debt ceiling will be implemented to prevent a return to unsustainable debt levels. He indicated that the current fiscal responsibility act would be amended to impose a limit on government borrowing. He stressed the importance of fiscal discipline, noting that the debt restructuring process was a “very painful exercise” and that Ghana must avoid relapsing into unsustainable debt.
In addition to the domestic debt, Ghana has so far restructured its bilateral debts that saved the country some $2.8 billion, the Eurobond worth $13 billion which led to an outright debt cancellation of about $5billion with a debt service relief of about $4.3 billion. The debt restructuring with the commercial creditors worth about $2.7 however remain outstanding.
