Ghana Nears $13 Billion Debt Restructuring Deal with International Bondholders

Ghana is on the brink of finalizing a significant debt restructuring agreement with its international bondholders, potentially reshaping $13 billion of its external debt. This development comes shortly after the West African nation reached a deal with its official creditors earlier this month.

The proposed agreement involves a substantial cut on the principal, potentially reaching up to 37%, along with an extension of bond maturities. This restructuring is a crucial step for Ghana, which defaulted on most of its $30 billion external debt in 2022 due to a perfect storm of global economic challenges.

Ghana’s financial woes stem from a combination of factors, including the COVID-19 pandemic, the Ukraine conflict, rising global interest rates, and an unsustainable debt burden. To address these issues, the country joined the G20 Common Framework, a debt treatment process designed to streamline restructuring efforts and involve major creditors like China.

The negotiations, which began in mid-March with two groups of bondholders, initially hit a roadblock in April when the proposed deal failed to meet the International Monetary Fund’s (IMF) debt sustainability requirements. However, recent revisions have apparently brought the agreement in line with the IMF’s framework.

This debt restructuring is a critical component of Ghana’s broader economic recovery plan. It’s closely tied to the country’s $3 billion IMF loan package, with the next tranche of $360 million potentially being released soon. As Africa’s second-largest cocoa producer, Ghana’s economic stability has significant regional implications.

The imminent agreement with bondholders, following the recent deal with official creditors, marks a pivotal moment in Ghana’s efforts to regain financial stability and set the stage for sustainable economic growth.