Ghana’s bilateral lenders, through the Official Creditor Committee (OCC), have approved the government’s agreement with Eurobond holders to restructure approximately $13.1 billion in debt.
This debt treatment aligns with the Comparability of Treatment principle, a key aspect of the OCC Common Framework for debt restructuring.
The Ghanaian government will now seek approval from all its bondholders to finalize the debt rework, pending a vote on the proposed terms.
The Ministry of Finance confirmed the OCC’s approval in a statement, highlighting the importance of the comparability treatment.
This measure ensures that all external creditors are treated equally within the scope of the restructuring, aiming to restore debt sustainability and prevent a disorderly default.
This initiative will also provide significant financial relief to Ghana during the three-year International Monetary Fund (IMF) program implementation.
The Ministry of Finance expressed gratitude to its official partners and representatives from the two Bondholders’ Committees for their constructive engagement over recent weeks.
The government plans to continue proactive engagement with the Steering Committees to finalize documentation and proceed promptly with the consent solicitation.
GH¢225bn Relief from Debt Restructuring
Ghana’s comprehensive debt restructuring exercise, encompassing domestic debt, external bilateral debt, and commercial bondholders’ debt, has resulted in principal and interest relief totaling over GH¢225 billion.
Eurobond Debt Restructuring
The restructuring of $13.1 billion in Eurobond debts has yielded significant savings, including the cancellation of $4.7 billion (GH¢65 billion) in debt.
This represents a 37% effective nominal haircut, an increase from the initial 33% offer. The savings include $1.5 billion in principal and $2.9 billion in interest. Additionally, Ghana will save $4.4 billion (GH¢60 billion) in debt service, providing further financial relief during the IMF program.
Bilateral Debt Relief
The $5.4 billion agreement with bilateral debt holders will offer approximately $2.8 billion (GH¢39 billion) in debt service relief, with payments postponed between 2023 and 2026 to be repaid later at a cheaper interest rate.
Domestic Debt Restructuring
The Domestic Debt Exchange Programme (DDEP) has restructured GH₵203 billion, resulting in GH₵61 billion in debt service savings over 2023.
The programme achieved a high participation rate of almost 95%, with coupon rates reduced from 21% to 9% on average and maturities extended.
This reduction eased the near-term local debt service burden, which previously consumed more than 40% of the country’s tax revenues.
Alignment with IMF Programme
The debt restructuring outcomes align with the IMF program parameters for Ghana’s three-year Extended Credit Facility (ECF) and unlock the next tranche of $360 million.
These efforts provide much-needed financial relief and pave the way for renewed focus on critical infrastructure and development projects, with expectations that many stalled projects will soon resume.
Factors Leading to Ghana’s Default
Ghana defaulted on most of its $30 billion in external debt in 2022, due to the economic fallout from the COVID-19 pandemic, inflation surges, Cedi depreciation, the war in Ukraine, and higher global interest rates.
These factors exacerbated economic strains, making the country’s debt unsustainable.
Consequently, Ghana suspended payments on its external loans in December 2022 as part of the broader debt restructuring effort under the 17th IMF loan-support program to achieve debt sustainability.
