Home Headlines Ghana’s $4.7 Billion Debt Restructuring Deal: A Crucial Step Towards Economic Recovery

Ghana’s $4.7 Billion Debt Restructuring Deal: A Crucial Step Towards Economic Recovery

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Dr Mohammed Amin Adam
Dr Mohammed Amin Adam

Ghana has achieved a landmark agreement with international bondholders to restructure approximately $13 billion of its debt, signaling a significant step toward economic stability.

Under the agreement, bondholders will accept a $4.7 billion write-down, equivalent to a 37% effective nominal haircut, exceeding the initial 33% offer. This restructuring is aligned with the parameters set by the International Monetary Fund (IMF) under Ghana’s Extended Credit Facility (ECF), providing crucial cash flow relief of about $4.4 billion during the IMF-supported financial program until 2026.

The deal, subject to final documentation and conditions, marks the culmination of negotiations in December 2022 as part of Ghana’s broader efforts to manage its $30 billion external debt default, exacerbated by economic challenges, including the COVID-19 pandemic and global economic shifts.

In addition to restructuring Eurobonds, Ghana has also advanced in restructuring domestic bonds, achieving significant debt service savings of GH₵61 billion through its Domestic Debt Exchange Programme (DDEP).

The Ministry of Finance, in its proactive approach, is set to launch a consent solicitation in the coming weeks, marking the final step of the three-step restructuring process initiated in late 2022. This follows a recent successful negotiation with bilateral creditors, paving the way for an IMF disbursement of $360 million under Ghana’s $3 billion program.

The restructuring agreement, beyond its financial aspects, includes non-financial provisions such as regular public debt disclosure, ensuring fair creditor treatment, and clauses to restore lost benefits. These provisions are aimed at normalizing relations with bondholders and restoring Ghana’s access to international markets, further enhancing investor confidence.

Investor confidence hinges on Ghana’s commitment to fiscal sustainability and macroeconomic stability, underscored by forthcoming amendments to the Fiscal Responsibility Act and ongoing economic policy implementation.

This debt restructuring deal represents a pivotal moment for Ghana, offering a path toward economic recovery and sustainable growth amidst global uncertainties.

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