World Bank Country Director Robert O’Brien has revealed that Ghana’s classification as high debt distress country will be reviewed as soon the country reaches a deal with the external commercial creditors.

Mr. O’Brien noted that there are some technicalities surrounding the debt classification processes for countries.This, he explained is the reason the progress made in reaching an Agreement in Principle with the bilateral creditors did not reflect in the latest Debt Sustainability Analysis done on the country.

He disclosed this on PM EXPRESS Business Edition with host George Wiafe.

“The Bank is satisfied with the progress that Ghana is making when it comes to the negotiations that government is having with external creditors. As long as it is in line with the IMF programme, that should impact on the analysis”, he said.

Background

In the latest Debt Sustainability Analysis published in July 2024, the International Monetary Fund (IMF) and the World Bank have confirmed Ghana’s status as a country in debt distress.

The joint report from the Bretton Woods Institutions indicated that Ghana remains classified as such because it has not yet finalized the restructuring of its external commercial debt as required by the IMF-supported program.

They noted that significant financing gaps persist, which need to be addressed through a debt restructuring process with commercial creditors, in line with the Debt Sustainability Analysis and IMF guidelines.

According to data released by the Ministry of Finance on the debt repayment freeze as of December 2022, Ghana’s total external debt amounts to $20 billion. This includes $5.4 billion in bilateral external debt, $13.1 billion owed to Eurobond holders, and $10.4 billion to multilateral creditors.

Outlook for Ghana’s Economy

Mr. O’Brien said the World Ban is currently satisfied with measures taken by government to help stabilize the economy.

“When we look at some of the major indicators, there has been a much improvement from last year. One can talk about inflation rate”, he said.

He however maintained that the major concern is hinged on election related spending.

“I think that is the biggest threat to the current economic recovery. How is government going to manage the elections when it comes to expenditure”, he said.

“Government has given the assurance that it is committed to fiscal prudence and we hope that they stick to that assurance that it has given to the donors, investors and Ghanaians”, he said.

Asked whether the economy is on the right path, Mr. O’ Brien said “there are indeed clear signs of economic recovery and all the indicators are supporting that claim”.