Ghana Struggles to Secure Debt Restructuring Deal with International Bondholders

Ghana Struggles to Secure Debt Restructuring Deal with International Bondholders
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Ghana has not succeeded in reaching an agreement on restructuring approximately $13 billion of its external debt with two groups of international bondholders, according to a Reuters report.

The report, citing a government statement from Monday, highlighted that the negotiations failed to align with the debt sustainability guidelines set by the International Monetary Fund (IMF).

Furthermore, the restructuring proposal from the Ghanaian government was also turned down by a group of regional bondholders, which includes several African banks. This setback underscores the complexities of reaching a consensus that satisfies all parties involved while adhering to IMF stipulations.

“The government is diligently seeking solutions that align with the parameters of the IMF program, based on ongoing policy discussions. Our goal is to formulate an agreement that all stakeholders can accept,” stated the government, according to Reuters.

The economic backdrop for these discussions is dire. In December 2022, Ghana defaulted on most of its $30 billion external debt, marking one of its most severe economic crises. This default has effectively barred the country from accessing international capital markets, pushing it to rely more heavily on domestic markets through treasury bills.

Currently engaged in its 17th IMF bailout program, Ghana reached a staff-level agreement with the IMF on April 13, 2024, for a second review. This agreement is a critical step towards securing a third installment of $360 million under the bailout.

At a recent press conference in Accra, Stephane Roudet, the IMF Mission Chief to Ghana, emphasized the urgency for Ghana to finalize deals with its commercial and bilateral creditors. This completion is essential for the IMF Management and Executive Board to approve the forthcoming disbursement of funds.

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