Ghana suspends payment of part of its foreign debt as economic crisis worsens

Ghana has announced that it temporarily suspended the payment of part of its external debt as the country struggles due to an economic crisis.

On Monday, the Finance Minister of Ghana, Ken Ofori-Atta, announced the suspension of all debt service payments on “certain categories” of external debt, including Eurobonds. The finance ministry said that the latest move could help to prevent further deterioration of the economic, financial and social situation of the country. The ministry also called the latest decision an “interim emergency measure.”

Ghana turned up to the IMF (International Monetary Fund) to revive the economic recovery efforts. Last week, the government of Ghana reached a $3-billion staff-level agreement with the IMF to help shore up its public finances.

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The Ghanaian cedi (currency of Ghana) also plummeted over 40 per cent since the start of this year. 1 Ghanaian Cedi equals 0.11 United States Dollars (USD) as of 20 December 2022. Reportedly, the Cedi appreciated by more than 36% between December 12 and December 16.

As part of the December 13 agreement between Ghana and the IMF, the country can use the funds to restore financial stability in the country. Stephane Roudet, IMF’s mission chief to Ghana, reportedly said that the IMF package could help the country solve various problems.

Earlier, Ghana announced a domestic debt exchange programme. The country reportedly asked investors to exchange around $9 billion in domestic debt for new bonds. The central bank of Ghana also announced relief measures for banks participating in the bond exchange programme. 

While presenting the 2023 budget, Ghana’s Finance Minister Ken Ofori-Atta said that his country was at high risk of debt distress. 

Last month, protests took place in Ghana’s capital Accra over the economic condition of the country, with protesters calling for the resignation of Nana Akufo-Addo, the president of Ghana.