Ghana will recommence negotiations with its bondholders next week to finalize a debt restructuring deal on $13 billion of international bonds, following an agreement with official creditors earlier this week, according to four sources who spoke with Reuters.
In 2022, Ghana, a major producer of gold and cocoa, defaulted on most of its $30 billion in external debt. The default was exacerbated by the Covid-19 pandemic, the war in Ukraine, and rapid global interest rate hikes, which increased borrowing costs.
Formal discussions with two groups of bondholders began in mid-March. These groups included Western asset managers, hedge funds, and regional African banks. However, talks stalled in April when the proposed deal did not meet the IMF’s debt sustainability analysis (DSA) requirements. Both sides now face pressure to reach an agreement before the December elections.
Sources revealed that government advisors re-engaged with the bondholder groups shortly after concluding the deal with official creditors on Tuesday. The advisors shared details of the creditor deal and new information from the IMF’s updated debt sustainability assessment.
‘People are incentivised,’ one source noted. ‘Things can happen quickly.’
Ghana’s Finance Ministry did not respond to a request for comment. The shared information will serve as the basis for next week’s discussions, with financial advisors currently reviewing the data.
Previous negotiations with bondholders holding about $13 billion in Ghana’s overseas bonds failed to align with the IMF’s debt-sustainability targets. However, Ghana’s economic situation has improved since then. Two sources expressed optimism that the new deal would comply with the IMF’s adjusted DSA, based on the second review concluded in early April.
These forthcoming talks are crucial for stabilizing Ghana’s economy and securing a sustainable financial future for the nation.
