Ghana has initiated formal discussions with its international bondholders to restructure over $13 billion in external debt.
This move comes as the West African nation grapples with its worst economic crisis in decades.
The government sent a debt restructuring proposal to a committee representing the creditor group, which includes major investment firms like BlackRock and Amundi.
The details of this proposal remain confidential due to non-disclosure agreements (NDAs) signed by both parties.
These NDAs temporarily restrict bondholders from trading their Ghanaian notes while negotiations continue.
Ghana’s aim is to secure significant debt relief. The country defaulted on most of its external debt in December 2022 and is seeking to reduce its debt burden by $10.5 billion over the next four years.
This restructuring is part of a broader $3 billion reform program with the International Monetary Fund.
There are potential points of contention in the negotiations. While Ghana seeks a straightforward exchange of old bonds for new ones, some bondholders are pushing for the inclusion of “state-contingent debt instruments.”
These instruments offer potentially higher payouts if Ghana’s economy performs better than anticipated. However, the government may view such structures as overly optimistic.
These talks mark a crucial step for Ghana’s economic recovery. Reaching an agreement with bondholders is vital to securing debt relief and stabilizing the nation’s finances.
The success of these negotiations will be closely watched by investors and analysts alike.
