Ghana Secures $360 Million IMF Funding After $4.7 Billion Debt Restructuring Deal

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Dr Mohammed Amin Adam
Dr Mohammed Amin Adam

Ghana has finalized a significant debt restructuring agreement, securing a $4.7 billion reduction from Eurobond holders, representing 37% of its $13 billion debt load.

This move paves the way for the country to receive the next tranche of $360 million in funding from the International Monetary Fund (IMF).

Debt Restructuring: A Crucial Step in Ghana’s Economic Recovery After extensive negotiations, Ghana’s institutional bondholders have agreed to a 37% cut in their principal and extended bond maturities until March 2027. This debt restructuring, a crucial step in Ghana’s economic recovery journey, comes at a time when the country is striving to overcome the challenges of defaulting on most of its $30 billion external debt in 2022.

The agreement offers Eurobond holders two options: the ‘DISCO’ bond option provides a 5% interest rate on new bonds until July 2028, increasing to 6%. This option involves a haircut, which means bondholders will receive less than the face value of their bonds. Alternatively, the ‘PAR’ option offers a 1.5% interest rate on bonds without any haircut. This means bondholders will receive the full face value of their bonds, but at a lower interest rate. The choice between these two options depends on the bondholders’ risk appetite and their long-term investment strategy.

Eurobonds, denominated in a foreign currency, are crucial for countries like Ghana seeking external financing.

This development follows Ghana’s economic growth of 2.9% in 2023, surpassing IMF projections of 1.5%. Coupled with the debt restructuring, Ghana aims to significantly reduce its debt-to-GDP ratio from 109% to 55% by 2028, signalling a positive trajectory in its fiscal health.

IMF’s Approval: A Vote of Confidence in Ghana’s Recovery Efforts The IMF’s approval of the $360 million tranche is a clear vote of confidence in Ghana’s recovery efforts. This approval not only provides essential cash flow relief estimated at $4.4 billion during the IMF loan program but also underscores the international community’s belief in Ghana’s ability to steer its economy towards stability and growth.

This agreement mirrors similar recent debt restructuring efforts, such as Zambia’s $3 billion Eurobond restructuring deal in March, highlighting ongoing financial stability efforts in the region.

This story is developing.

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