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Ghana is anticipating “very hard” talks with eurobond holders in the coming months as it plans to reach an agreement on restructuring its investments by a self-imposed deadline of September.
The International Monetary Fund’s first review of Ghana’s extended credit facility programme is at the end of the third quarter and the country aims to report on a dollar bonds revamp deal during a meeting with the IMF, Minister of Finance Ken Ofori-Atta said in the capital, Accra, on Sunday.
“We have given eurobond holders literally all the information that is required on the debt sustainability analysis,” Ofori-Atta said. “They’ve seen what we have done on the domestic front so I’m sure that there’s going to be some very hard discussions and negotiations going forward but I’m confident that we will find a place to land that will be good for everyone.”
Ghana embarked on a debt restructuring in December to qualify for the IMF programme. The government concluded the first part of a domestic debt exchange in February, with investors exchanging 87,8 billion cedis ($7,US7 billion), or 67 percent of existing bonds for new ones, against a government target of 80 percent. The new securities paid as little as a 8,35 percent coupon, compared with an average of 19 percent on the old notes.
While this result and financing assurances from bilateral creditors under the Group of 20’s Common Framework were enough for the IMF Board to approve Ghana’s programme last month with an initial disbursement of US$600 million, further disbursements partly depend on Ghana concluding the rest of the debt reorganisation.
A timely debt restructuring agreement with creditors is essential for Ghana to secure the expected benefits of its programme with the IMF, Stéphane Roudet, IMF mission chief said last week at the end of a one week visit. The country’s target under the IMF programme is to reduce its debt to gross domestic product ratio to 55 percent by 2028 from 71,2 percent of GDP at the end of December.
Ghana expects to reach a memorandum of understanding on specific terms of restructuring with bilateral creditors in a week’s time, Ofori-Atta said. – Bloomberg
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