The economic situation in Ghana and the HIPC: A happy convergence of events

Thanks to its good economic performance during the 1980s and 1990s, Ghana earned the sympathy of the Bretton Woods institutions and subsequently their financial support. Today, after a successful political transition, the country is reinforcing its good reputation with donors, which in turn is helping Ghana to face up to a serious new financial crisis. Financial assistance largely takes the form of very favorable terms for its debt under the Heavily Indebted Poor Countries Initiative (HIPC). After initially refusing to participate in the initiative, the government eventually changed its position. This reversal is easily understood given the terms of the HIPC, when taken with Paris Club renegotiations, which allow Ghana to fully benefit from debt reduction while making the conditions imposed by the initiative with regard to resource allocation more favorable.