IMF helping Ghana, other distressed nations to get their debts cancelled

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IMF
IMF

The International Monetary Fund (IMF) says it is working towards a debt cancellation programme for Ghana and other countries amid a global economic recession scare this year.

The other countries are Ethiopia, Zambia, Chad, Lebanon, Surinam and Srilanka.

The move, Madam Kristalina Georgieva, the IMF Managing Director, said was to avert any “bad surprise” on the global economy, out of which 25 per cent had its trade in emerging markets territories.

“We’re working hard to press for debt resolution for these countries and we’ve engaged with the traditional creditors, the Paris Club, the non-traditional creditors, China, India, and Saudi Arabia. Our call is very simple: Urgently we have to act,” she said in an interview.

Mad Georgieva noted that though the countries that were in debt distress were not systemically significant to trigger a debt crisis, a third of world economy would hit a recession in 2023, hence, the urgency to find a resolution to the debt problem.

“The risk of contagious is not high. However, if that debt continues to grow, then let’s remember 25 per cent of the emerging markets is trading in this territory. Then the world economy is in for a bad surprise,” she said.

Ghana has reached a Staff-Level Agreement (SLA) with the IMF, and currently doing a domestic debt restructuring programme and engaging its external creditors, pending an approval by IMF Management and the Executive Board.

The SLA is for a three-year programme supported by an arrangement under the Extended Credit Facility (ECF) of about $3 billion by the IMF.

It is aimed at restoring macroeconomic stability and debt sustainability while protecting the vulnerable, preserving financial stability and laying the foundation for strong and inclusive economic recovery.

On recession, the IMF Managing Director, said: “We expect one third of the global economies to be in recession. Even countries that are not in recession, it would feel like recession.”

She emphasised on the need to act quickly and said: “For most of the world economy, this is going to be a tough year, tougher than the year we leave behind, [therefore], we have to be concerned.”

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