Ghana is on the verge of finalizing an agreement with its Eurobond holders for the restructuring of approximately $13 billion worth of international debt, with sources indicating a significant haircut on the principal amount.
According to reports from Reuters, Ghana has reached an agreement in principle with its Eurobond holders, with bondholders expected to accept a haircut on principal of up to 37%.
This development follows a deal finalized earlier in the month with official creditors.
Ghana, like many other countries, has faced economic challenges exacerbated by the COVID-19 pandemic, the conflict in Ukraine, and increased global interest rates. These factors led to a default on a significant portion of its $30 billion external debt in 2022.
In line with other nations facing similar challenges, Ghana engaged in debt restructuring discussions under the G20 Common Framework, which aims to facilitate expedited debt overhauls and involves key bilateral lenders such as China.
Negotiations between Ghana and two groups of bondholders began in mid-March, involving Western asset managers, hedge funds, and regional African banks. However, talks hit a snag in April after the proposed deal failed to meet the requirements of the International Monetary Fund’s (IMF) debt sustainability analysis. Both parties regrouped to find a revised solution, aligning with a revised IMF debt framework on Ghana that was shared with bondholders earlier.
An official announcement regarding the deal is expected by next week, according to one source close to the negotiations, while two other sources suggested it could come as early as Friday. The Ghanaian finance ministry and the Paris Club, an alliance of creditor nations, were not immediately available for comment.
The progress in debt restructuring negotiations underscores Ghana’s commitment to addressing its financial challenges and stabilizing its economy in the face of external pressures. As the country navigates these complexities, stakeholders are closely monitoring developments to ensure sustainable and equitable solutions for all parties involved.