US Treasury Secretary Janet Yellen pledges support for Ghana and Zambia’s sovereign debt restructuring during the 2023 Spring Meetings of the International Monetary Fund (IMF) and the World Bank this week.
Ms Yellen will advocate for the speedy resolution of Common Framework cases and stress the importance of concluding the debt treatment for Sri Lanka. A record number of developing nations are at risk of a debt crisis due to inflation, borrowing costs, the Russia-Ukraine war, and a strong dollar.
Ghana’s President Nana Addo Dankwa Akufo-Addo was optimistic about concluding ongoing negotiations with the IMF to receive the support of the fund last March. However, some critics, including the Minority in Parliament, claim that the deal has not been concluded because the government has not been able to satisfy the financing assurances regarding the $3 billion IMF bailout.
The disclosure of US support comes after US Vice President Kamala Harris visited Ghana last month and held talks with President Akufo-Addo. During her visit, it was announced that the Department of Treasury’s Office of Technical Assistance (OTA) will deploy a full-time resident advisor to assist Ghana’s Ministry of Finance to develop and execute medium-to-long-term reforms needed to improve debt sustainability and support a competitive, dynamic government debt market.
The US will also intervene on Ghana’s behalf with the Paris Club as the country seeks debt forgiveness as part of the IMF’s balance of payment support. Ms Harris stated that the US would help Ghana with all the support it needs to ensure that it scales through its current economic crisis.
“We welcome Ghana’s commitment to reform its economy for sustainable and inclusive growth. We support Ghana’s engagement with the IMF, and we will continue to push all bilateral creditors to provide meaningful debt reduction for countries that need it.
“It is critical to do so to build long-term economic growth and prosperity and to increase US investments. Our partnership is already strong, and I believe that today we have strengthened it.”
The US Treasury’s support is a significant boost to Ghana’s efforts to restructure its sovereign debt and create a sustainable and dynamic government debt market. The country will continue to engage with the IMF and the World Bank to find a solution to its debt overhang and foster growth in the economy.