Ghana’s External Debt Restructuring: International Bondholders Push For Equity
thevaultznews.comFeb 28, 2023 8:47 AM
Some of Ghana’s International bondholders have pushed for equity with regards to restructuring of Ghana’s debt amidst concerns of equity affecting efforts to secure the International Monetary Fund (IMF) board approval for Ghana’s program by the end of next month (March).
This follows reports that government of Ghana is expected to propose a haircut on the principal payments on the Eurobond.
The report, however hasn’t gone down well with some of these investors. This is because, they maintained that this was not the case when it came to the domestic bondholders so less, government going ahead to offer exemptions to some category of domestic bondholders.
The bondholders also raised many concerns about the Ministry of Finance’s many plans to exempt Ghana’s bilateral partners from the proposed debt restructuring of the $29.2 billion of its external debt.
The Euro bondholders’ debt is currently pecked at $13.1 billion though, it really looks uncertain for now, how this disagreement with some of these individual bondholders might affect the process in securing the deal with these investors on time to help the country secure the IMF board approval for Ghana’s economic program by the end of next month.
The Euro bondholders have also put together a creditors’ committee to engage the government of Ghana.
The IMF maintained that it only needs commitment from these creditors that they will participate in the debt exchange program or help in financing Ghana’s program when it comes to restructuring of its debts.
Assuredly, the Ministry of Finance has informed its external creditors of equal importance it gave to the Domestic Debt Exchange Programme (DDEP).
In a statement, the Ministry said it will continue to work together to advance the progress of external debt treatment in order to ensure Ghana’s long-term macroeconomic stability.
Meanwhile, successful settlement of new bonds and government’s upcoming negotiation talks with China, are expected to improve investor confidence and the outlook of the cedi.
The local currency, the cedi, has come under pressure lately, losing 1.92% to the dollar last week. As a solution to this, although, the Bank of Ghana increased the support on the market, it could not tame the demand for the American green back. Additionally, the central bank also provided about 10.75 million dollars on the spot market last week.
The dollar, this morning, Tuesday, February 28, 2023 is going for ¢13.05. The pound is selling at ¢15.45 and the euro at ¢13.60 on the retail market.
Government’s decision to settle and list newly issued bonds raises confidence
A Senior Finance Lecturer at the University of Cape Coast Business School, Seyram Kawor has expressed confidence in Ghana’s economy, following government’s decision to settle and list the newly issued bonds as benchmark for the fixed income market.
According to him, the move will send positive signals to the IMF and external creditors, that the country is committed to ensuring macroeconomic stability.
“These arrangements, as we have done successfully, will send signal to the IMF and the international community that government of Ghana is committed to ensuring that the right thing is done and I am very optimistic that , once we go through this successfully, we will be in the position to restore our economy to the level it was.”Seyram Kawor
Meanwhile, government has agreed to ensure the payments of the coupons and principals of the old bonds and agreed to ensure that payment resumes by March 13, 2023.