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The government has secured a memorandum of understanding (MoU) with the Official Bilateral Creditor Committee (OCC) co-chaired by France and China after 16 months of negotiations.

The MoU, which follows an interim agreement in January, represents the final step in the country’s debt restructuring talks with the OCC, which the country owes $5.1 billion. Each official creditor is now expected to follow its internal procedures to sign the MoU.

Once signed, the agreed terms will be implemented through bilateral agreements with each OCC member. The agreement will now pave the way for the Executive Board of the International Monetary Fund (IMF) to approve the second review of the country’s three-year programme with the fund aimed at restoring macroeconomic stability and debt sustainability.

The approval of the second review expected later this month will unlock the third tranche of $360 million from the IMF, bringing the total disbursement under the programme to $1.56 billion.

The $360 million will help shore up the country’s international reserves and help stabilize the Ghana Cedi, which has lost some ground against the major trading currencies since the beginning of the year.

The IMF Board’s approval is also expected to trigger more financial assistance from development partners, particularly the World Bank.

Background

Following the formation of the OCC in May 2023, the IMF Executive Board approved Ghana’s three-year programme with the fund. The IMF also approved the first review of Ghana’s programme in January after the government reached an interim agreement with the OCC.

Although the government reached a staff-level agreement with IMF’s mission in April for the second review, the Executive Board’s approval was hinged on the country’s ability to formalise its agreement with the OCC through an MoU.