Ghana’s government is accelerating negotiations to restructure its massive external debt burden. Finance Minister Mohammed Amin Adam announced this on Tuesday, highlighting the urgency of a deal to rework over $13 billion in international bonds.
This push for faster progress comes as Ghana navigates its worst economic crisis in decades. The West African nation is seeking to regain financial stability with the support of a $3 billion International Monetary Fund (IMF) program.
Early progress has been made. In January, Ghana reached an agreement in principle to restructure $5.4 billion of loans with official creditors. Negotiations are also underway with private bondholders. According to Reuters, the government has begun formal talks with one bondholder group under confidentiality agreements.
Minister Adam revealed that the government has received counter-proposals from two separate bondholder groups on the debt restructuring terms. He emphasized that in the coming weeks, extensive discussions with bondholder representatives will be held to advance the restructuring process.
Positive developments are happening on another debt front. Ghana successfully concluded negotiations with independent power producers (IPPs) and expects to sign an agreement within the next few weeks. This agreement will address $1.58 billion in outstanding arrears owed to the IPPs. While an initial proposal for restructuring the arrears was rejected, an interim payment offer was made in July. The upcoming agreement is expected to spread the remaining debt over a period of around five years, providing Ghana with some financial relief.
Ghana’s economic struggles culminated in a default on most of its $30 billion external debt in December 2022. This decision came amidst a sharp rise in debt costs and inflation. The situation remains concerning, with the central bank reporting a slightly worsened inflation outlook in the past two months. Continued close monitoring of the situation is deemed necessary.
