Ghana to exchange new bonds bond with old ones

December 7, 2022

South African Parliament postpones vote on president's ouster — Johannesburg (South Africa).- South African President Cyril Ramaphosa waves as he departs the National Executive Committee of the African National Congress (ANC NEC) meeting concerning his political future, during a ANC NEC meeting at Nasrec, in Johannesburg, South Africa, 05 December 2022. EFE/EPA - KIM LUDBROOK

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Ghana asked investors to exchange around US$9 billion in domestic debt for new bonds on Monday (Dec.5) to ease a crunch in payments. The government is presently negotiating an IMF bailout during its worst economic crisis in decades

Ghana asked investors to swap around US$9 billion in domestic debt for new bonds on Monday (Dec.5) to ease a crunch in payments. The government is presently negotiating an IMF bailout during its worst economic crisis in decades.

Finance Minister Kenneth Ofori-Atta said the debt exchange would seek to exchange around 137 billion cedis or $9.7 billion in current debt for four new bonds maturing between 2027 and 2037. The country is negotiating a US$3 billion credit from the IMF.

Inflation is running at more than 40 percent and the national currency, the cedi, has lost 50 percent in value this year, pushing up debt by US$6 billion in 2022. Ghana’s government is seeking to make its debt more sustainable after facing warnings about the risks of default. Currently, debt servicing payments are absorbing more than half of the government’s revenues and 70 percent of its tax revenues.

The minister said he expected the economy to stabilise next year and inflation to return to single digits. Ghana is a top cocoa and gold producer. It also has oil and gas reserves. But its debt payments are high and its revenues are weak. The minister said the government had worked to minimise the swap impact on investors holding government bonds, especially small investors and other vulnerable groups as there will not be any change in the bonds’ principal.

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Ofori-Atta added that the government recognised banks and financial institutions would hold a large amount of local government debt. But regulatory agencies and the central bank would help ease the impact on them. A foreign debt restructuring programme would be presented later, Ofori-Atta promised.