Bloomberg has indicated from its data compilation that, Ghana needs to repay $3.5 billion in loans and bonds next year.
According to Bloomberg report, the quoted figure is higher than $3 billion Ghana expects from the International Monetary Fund (IMF) when an agreement is reached.
“Ghana, a regular client of the IMF has often failed to meet targets set in previous programs, including the last one, which ended in 2019 with a waiver from the fund, essentially rubber-stamping its lack of progress. The government’s decision to aggressively tap Eurobond markets in 2020, so soon after that program ended, spooked investors and led the agencies to revisit their ratings.
“A government plan to slash expenditure by 20% did little to assuage the market. Ghana’s economy is debt-ridden as the country continues to borrow more than its source of financing for its projects and flagship programs.”
Bloomberg Report
Fitch, which is also known for offering credit ratings that describes each nation’s ability to meet its debt obligations, has also estimated Ghana’s debt service payments to be more than $3 billion in 2023, including amortization and interest.
The Report emphasized that, after continuous downgrades by rating agencies since the beginning of the year which saw Ghana get kicked out of the international capital market, the country has battled with harsh economic conditions coupled with high inflationary pressures, soaring interest rates, and cost of borrowing as well as a depreciation of the cedi.
Government Initiates Debt Exchange Program As It Awaits IMF Bailout
According to Bloomberg’s Report, the government however expects that a financial bailout from the IMF could alleviate the burden on the gold and cocoa-rich country. But before an IMF deal could be reached, Ghana is embarking on a debt exchange program, an admission of default on its debts.
However, bondholders and creditors have expressed their disagreement with the programme.
According to these investors, proper consultation and consensus-building have not been achieved, hence they do not see any future in the debt exchange initiative program government wants to undertake.
Yerlan Syzdykov, a global head of emerging markets at Amundi SA, Europe’s biggest money manager who is a member of the Ghana bondholders committee also shared a different opinion on government’s debt exchange program..
“There is no more stigma around defaulting or restructuring, and this is quite unusual in the context of emerging markets history. It is part of the natural economic cycle.”
Yerlan Syzdykov
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