According to Finance Minister Mohammed Amin Adam, Ghana has made "significant progress" in debt-restructuring negotiations, and the most recent issue that caused its eurobonds to plunge on Monday would be resolved in further discussions with bondholders.
An interim agreement was reached last week after negotiations that began in mid-March. Foreign investors now own around 40% of Ghana's $13 billion in nonperforming eurobonds. Nevertheless, Adam acknowledged in an interview that the accord "slightly" deviates from the IMF's debt sustainability guidelines.
Adam said that the current process, guided by the IMF's debt sustainability analysis, or DSA, "is not a failure but rather an effort to reach an agreement consistent with debt thresholds." In order to get final conditions that satisfy everyone, the government would "regroup with our bondholders to continue to tweak the terms," he said.
Ghana's eurobonds had their worst decrease since December 2022. The notes due in June 2035 saw a decline of up to 3 cents to 47.55 cents on the dollar before the slide was moderated.
The Ghanaian government's "working scenario," according to an IMF statement, "is not in line with program parameters."
"With the aim of reaching an agreement that is consistent with program parameters, the IMF will continue to support the ongoing restructuring negotiations between the authorities and their external commercial creditors," the lender said.
The most recent development clarified the general contours of the eurobond restructuring; nevertheless, according to Standard Chartered Plc's director of Africa strategy Samir Gadio, the parameters of a deal would need to be "fine-tuned" to reach the IMF requirements. According to him, bond prices are now approaching the recovery levels that the restructuring plan suggests.
One of the two alternatives offered for the restructuring said that international bondholders had consented to an effective nominal haircut of 33 percent.
Over the Goal
Ghana's $77 billion economy must cut its debt to 55% of GDP by 2028 in order to reach its IMF objective. Prior to restructuring, the debt load was expected to be 109%. The debt would remain just over that goal under the present bondholder arrangement.
Ghana's economy performed better than anticipated, growing 2.9% in 2023 over the 1.5% original IMF forecast. According to Adam, this implies that a modified DSA would take the bondholder agreement into account.
As part of an agreement with the International Monetary Fund, Ghana started restructuring its debt a little over a year ago. In January, it reached a preliminary understanding with bilateral creditors to restructure $5.4 billion in debt under the Group of 20 Common Framework for Debt Treatment. The terms of the eurobond debt restructuring were established under that agreement.
