Ghana has requested debt relief through the Common Framework program, which is backed by the Group of 20 major economies, according to International Monetary Fund Managing Director, Kristalina Georgieva.
According to a source familiar with the matter, Ghana asked for a restructure of its bilateral debt on Tuesday under the Common Framework initiative backed by the G20.
The country is now the fourth to submit an application to the G20 initiative, which was established in 2020 and intended to simplify debt restructuring procedures when weaker nations began to falter as a result of the COVID-19 pandemic’s effects.
According to Georgieva in a blog post, “Ghana just became the fourth country to seek treatment under the Common Framework, sending a signal that it is seen as an important pathway for debt resolution.”
In order to incorporate non-Paris club members like China in debt reduction negotiations, Ghana is restructuring its debt in accordance with the Common Framework.
According to information from the International Institute of Finance, China is Ghana’s largest bilateral creditor with a debt of $1.7 billion, while the country owes the Paris Club members $1.9 billion (IIF).
Ghana, which in mid-December signed a $3 billion staff-level deal with the IMF, had been holding off on making this request because of the lengthy delays experienced by other nations adopting the procedure.
The Common Framework, intended to allow for quick debt restructuring, has received harsh criticism for moving at a glacial pace.
Early in 2021, Chad, Ethiopia, and Zambia signed up. Chad negotiated an agreement with creditors in November while Zambia is still in negotiations. The civil war in Ethiopia hindered its development.