Ghana’s Efforts to Restructure $13 Billion Debt Hit Roadblock
GHANA has hit a roadblock in its efforts to restructure $13 billion of international bonds as it failed to secure a workable debt deal with two bondholder groups. The government’s push to swiftly emerge from default and economic crisis has been hampered by the lack of agreement with the bondholders.
Formal talks have been put on hold after the International Monetary Fund indicated that the proposed deal would not meet its debt sustainability parameters. Finance Minister Mohammed Amin Adam stated that Ghana had reached an “interim deal” with bondholders but adjustments are needed to align with IMF targets.
Ghana defaulted on most of its $30 billion external debt in December 2022, leading to an economic crisis. However, the economy has shown signs of recovery with a growth rate of 2.9% in 2023, surpassing the IMF’s forecast.
The government is working towards satisfying the IMF’s requirements as part of a $3 billion, three-year loan program approved by the IMF in May 2023. The ongoing debt restructuring talks are crucial for Ghana to access much-needed overseas loans, aid, and investment.
Despite the setback, regional bondholders remain optimistic about reaching a deal before the end of the year, citing Ghana’s better-than-expected economic performance. The proposed bondholder deal includes options for bond maturity extensions and coupon adjustments to reduce debt repayments and interest costs.
Ghana, along with Zambia and Ethiopia, is reworking its debt under the G20 Common Framework to expedite debt overhauls. The slow progress in debt restructuring has hindered the countries’ economic recoveries and access to international financial support.
The IMF continues to support the restructuring talks, emphasizing the need for progress to ensure sustainable debt levels for Ghana’s economic stability. Discussions with bondholders are set to continue in the coming weeks as Ghana navigates its path towards financial recovery.