Ghana Qualifies for $3.5 billion in debt Relief.
World Bank Press release
July 14, 2004

Ghana on Tuesday qualified for a debt write-off of $3.5 billion from all its creditors after completing a global program for heavily indebted poor countries, the International Monetary Fund and World Bank said, Reuters reports.

The global lenders said Ghana would save about $230 million annually in debt service obligations to international financial institutions between 2004 and 2013. "Total debt relief under the enhanced HIPC Initiative from all of Ghana's creditors amounts to $3.5 billion in nominal terms," the fund and bank said in a joint statement.

They said the country had demonstrated good economic reform under the
Heavily Indebted Poor Countries initiative, or HIPC, a program devised by rich nations in the 1990s to ease the debt burdens of the world's poorest nations.

The institutions said the debt relief plus further bilateral assistance will lower Ghana's debt-to-export ratio to 84 percent and its debt-to-government revenue to 130 percent in 2004. They gave no comparisons. They said Ghana had increased its spending on the poor to 6.5 percent of gross national product from 4.5 percent in 2001. It has GDP had also accelerated to 5.2 percent in 2003 from 3.7 percent in 2000. In a separate statement, the World Bank said it had approved $125 million in loans and grants to help the West African government meet objectives under a poverty reduction strategy. The priorities include maintaining economic stability, enhancing growth strengthening governance and public sector management.

Meanwhile, BBC News reports that the executive directors of the World Bank have approved Ghana HIPC completion point. This is a follow-up to a similar approval by the IMF last Friday [9 July]. A statement from the Finance Ministry said the directors also approved a financing agreement of 125m dollars on the second poverty reduction support programme for the 2004 budget. The agreement comprised a grant of 40m dollars and a credit of 85m dollars. The decision of the two institutions is based on the satisfactory progress being made by the government in respect of political and economic governance.

Based on the approval of Ghana's completion point by the institutions, the government will be in France next week to meet the Paris Club for the final negotiations on the cancellation of debt owed to the Paris Club creditors, saysthe news report.

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