Restructuring the debt of Ghana

Paris Club creditors agreed on December 10, 2001 with the Government of the Republic of Ghana to a restructuring of its public external debt. This Paris Club agreement follows the International Monetary Fund's approval of the third review under the Poverty Reduction and Growth Facility on June 28, 2001.

This agreement treats roughly US$ 79 million of arrears as of May 31, 2001 and US$ 120 million of maturities in principal and interest falling due from June 1st, 2001 up to January 31, 2002.

The agreement is concluded under the so-called "Naples terms": pre-cut off date ODA credits are to be repaid over 40 years, with 16 years of grace, at interest rates at least as favourable as the original concessional rates applying to those loans ; pre-cut off date commercial credits falling due during the consolidation period are treated so as to reach a 67% cancellation rate taking into account previous cancellations undertaken by Paris Club creditors ; the remaining amounts are rescheduled over 23 years, with 6 years of grace, at market rates of interest (see attached table).

On an exceptional basis, arrears as of May 31, 2001 and 70% of maturities falling due during the consolidation period on debt contracted between the cut-off date and June 20, 1999 will be deferred. The repayment will be made over 5 years. 100% of moratorium interest on deferred amounts will be capitalised.

This treatment will lead to the immediate cancellation by Paris Club creditors of about US$ 27 million of Ghana's external debt. These measures are expected to reduce debt service due to Paris Club creditors between June 1st, 2001 and January 31, 2002 from US$ 122 million down to US$ 38 million. The remaining payments consist mainly of 30% of maturities on debt contracted after cut-off date and before June 20, 1999.

Ghana is expected to reach the decision point under the enhanced HIPC Initiative in early 2002. The creditor countries expressed their readiness in principle to fix then a new cut-off date that will be June 20, 1999 and to grant interim relief under Cologne terms of maturities falling due from the decision point to the completion point.