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Ghana: Finance minister expects debt restructuring deal next week

Published

1 year ago

December 1, 2023

Ghana’s Finance Minister, Ken Ofori-Atta, is confident his country will soon conclude the process for a restructuring deal with its official creditors by the end of next week.

The “cut-off date”—the date after which new loans will not be restructured—and the comparability of treatment between creditors were the major outstanding issues, Ofori-Atta told reporters, adding that any cut-off date would be fine for Ghana.

The minister stated that no single creditor, with a committee co-chaired by France and China, was impeding the debt restructuring because they were all worried about protecting their own interests. To receive approval from the executive board of the International Monetary Fund for the next $600 million payout from a $3 billion rescue loan, Ghana must come to a restructuring agreement with its official creditors.

“I hope that by the end of next week, we’ll have what we need,” Ofori-Atta said. “One of the key issues is the cut-off date and ensuring that treatment is comparable.”

“We can manage either way. So the issue is (for) the membership of the OCC to get comfortable with how it impacts them,” Ofori-Atta said when asked if there was a date that Ghana preferred.

“Everybody is looking at the comparability of treatment, and China and France are certainly the (official creditor committee) co-chairs, so they have a good impact on what will happen.”

Ghana, one of the first African nations to default on its foreign debt, is a major producer of cocoa, gold, and oil, but it has also been experiencing the worst economic downturn in a generation, with double-digit inflation and skyrocketing public debt.

Protests against the government were held last month in Accra due to worries about the nation’s economic situation.

Ghana defaulted on most of its external debts in December 2022 after it was locked out of international capital markets; and its debt costs spiralled out of control, exacerbating an economic crisis in which its currency slid and inflation soared.

The official creditors, who hold about $5.4 billion of Ghana’s $20 billion external debt that is being restructured, were considering dates in March 2020 and December 2022, Reuters reported in September.

While Dec. 31, 2022 is close to when Ghana defaulted, March 24, 2020 was being considered as a cut-off date because that was when the G20 introduced its debt service suspension initiative (DSSI) to help the world’s poorest countries cope with the fallout of the COVID-19 crisis, two sources said at the time. Ghana did not participate in the DSSI.

Ghana is restructuring its debt under the G20 Common Framework platform, which has been criticised for delays and divisions between creditors groups. Zambia’s process was derailed earlier this month when its official creditors rejected a deal the country reached with international bondholders.

Ghana owes about $13 billion to overseas bondholders. Good discussions were ongoing with them, Ofori-Atta said.

Related Topics:Debt restructuring Featured Ghana

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Nigeria obtains $600 million international loans for agriculture

Published

2 days ago

December 18, 2024

Ifeoluwa Dada

To promote food security and rural development, the Nigerian government, through the Ministry of Agriculture and Food Security, has obtained more than $600 million in foreign agricultural loans in 2024.

A $134 million credit facility from the African Development Bank was acquired by the government to increase seed and grain production across the country, according to information on the ministry’s website.

“The Federal Government has secured a loan facility of $134m from the African Development Bank to help farmers boost seeds and grain production in the country,” the statement read.

The fund now stands at $634 million after the Federal Government obtained a $500 million loan from the World Bank under the Rural Access and Agricultural Marketing Project.

The project will encourage social and economic growth in rural regions while enhancing access to hospitals, schools, and agricultural centres. Its goal is to close the gap between rural communities and bigger markets.

According to Aliyu Abdullahi, Minister of State for Agriculture and Food Security, states must establish operational road funds and road agencies to receive RAAMP monies.

Aminu Mohammed, the RAAMP National Coordinator, emphasised the project’s emphasis on rural infrastructure:

“The primary objective of RAAMP is to improve rural roads and trading infrastructure to boost food production,” Mohammed said.

The initiative, already underway in 19 states, will distribute funds competitively according to socioeconomic factors, implementation preparedness, and state co-finance pledges.

By creating Rural Access Road Authorities, the project also aims to increase the representation of women in the transportation industry.

The World Bank will contribute $500 million in the second phase of RAAMP, with the federal and state governments contributing $100 million in matching funds.

Farmers throughout Nigeria have criticised the Federal Government’s agricultural initiatives as being selective and badly executed, despite its attempts to increase agrarian activity through mechanisation, irrigation infrastructure, and in certain circumstances, financial support.

Many contend that the programs mostly help well-connected people, leaving off smallholder farmers, who are the foundation of Nigeria’s agriculture industry.

La’ah Dauda, a farmer from Kaduna, called the initiatives “very selective,” adding that even the data is scarce. They only raise awareness in areas that they find appealing. If others are left out, how can you recruit new farmers?

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Nigeria’s November inflation rate hits 34.60%

Published

2 days ago

December 18, 2024

Ifeoluwa Dada

According to figures released by the statistics office on Monday, Nigeria’s inflation rate increased for the third consecutive month in November, rising from 33.88% in October to 34.60% in annual terms.

Following a brief period of respite in July and August, the naira devaluation and a string of rises in the price of petroleum have been blamed for the inflation spike that started in September.

The most populous nation in Africa is experiencing the worst cost-of-living crisis in decades as a result of these circumstances.

The central bank has hiked interest rates six times this year, for a total rise of 875 basis points, to counteract increasing inflation.

Due to price increases for basics such as rice, maize, bread, potatoes, and cooking oil, food inflation increased to 39.93% year over year in November from 39.16% the month before, according to the National Bureau of Statistics.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.