Ghana has announced an agreement in principle with two bondholder groups to restructure approximately $13bn of its international debt. This deal, which includes up to a 37 percent reduction in debt, marks a significant step towards completing a long-awaited debt overhaul.
Under the agreement, bondholders will forego about $4.7bn of their claims and provide approximately $4.4bn in cash flow relief during the period of Ghana’s current loan programme with the IMF, which is scheduled to end in 2026. The government plans to formally launch the consent solicitation process in the coming weeks, which will involve presenting the proposal to all bondholders. If approved, this will allow Ghana to emerge from default.
The bondholder agreement is expected to offer Ghana a path to economic recovery through substantial debt relief and improved cash flow. The committee representing international bondholders has welcomed the deal, recognising its potential to stabilise the nation’s finances.
‘This is good news for the country,’ Theo Acheampong, Principal Analyst at S&P Global Market Intelligence, told Reuters. ‘It has been much faster than peers such as Zambia and should help bring down public debt, unlocking more resources for priority growth areas like agriculture and stalled infrastructure projects.’
Two options for bondholders
The proposal offers bondholders two options. The first option is a ‘disco bond’ with an interest rate starting at 5 percent, increasing to 6 percent after mid-2028. This option includes maturities across three instruments ranging between 2026-2029 and delivers a 37 percent haircut on the principal. The second option is a par bond, capped at $1.6bn, offering a coupon of 1.5 percent and maturing in 2037, with no principal haircut apart from a write-down on past due interest.
Additionally, a partially World Bank-guaranteed bond will see the multilateral lender make a cash payment to holders shortly after the restructuring, with remaining claims treated the same as other bonds.
This agreement follows a recent deal between Ghana and its bilateral creditors, paving the way for the IMF’s executive board to approve a $360 million disbursement after reviewing Ghana’s $3bn programme. The IMF has confirmed that the latest proposal aligns with the parameters of its loan programme.
Ghana’s official creditor committee, co-chaired by France and China, views the agreement as a good basis for consultation on whether it adheres to the principle of ‘Comparability of Treatment.’ This principle ensures that official creditor groups do not make outsised concessions compared to non-members and private lenders. The Paris Club of creditor nations, which usually coordinates communications for official creditors, did not immediately respond to a request for comment.
The IMF board is scheduled to meet on June 28 to discuss the proposal further.
Ghana, a major gold and cocoa producer, defaulted on most of its $30bn external debt in 2022 due to the economic fallout from the Covid-19 pandemic, the war in Ukraine, and higher global interest rates. Formal talks with the bondholder groups began in mid-March, involving Western asset managers, hedge funds, and regional African banks.
Ghana is restructuring its debt under the G20 Common Framework, which has already facilitated agreements for Zambia and Chad. Ethiopia is still working to address its debt burden under the program, which aims to provide swift debt relief to some of the world’s poorest countries but has faced criticism for being slow and cumbersome.
Ghana’s bonds traded slightly lower, with most of the curve bid between 51-53.5 cents on the dollar, according to Tradeweb data.
