Half of Ghana’s $7 Billion Government Debt Has Been Erased

Half of Ghana's government's $7 billion debt to the central bank was written off.
The remaining balance was replaced with a 15-year bond at a reduced rate.
Debt restructuring a key step for Ghana's eligibility for a $3 billion IMF bailout loan, aims to lower overseas debt payments by $10.5 billion over three years.
Half of Ghana's government's $7 billion debt to the country's central bank has been wiped off, and the remaining balance has been replaced with a 15-year bond with a reduced rate.

This is according to a report by the American news agency Reuters, which cites three sources with direct knowledge of the transaction.

The most recent action is a component of the West African country's effort to restructure its domestic debt, which is necessary to be eligible for the next installment of a $3 billion International Monetary Fund (IMF) bailout loan. Ghana now wants to concentrate on talks with foreign creditors.

In February, Ghana finished the first round of domestic debt restructuring by exchanging local currency bonds held by 85% of eligible holders for new bonds with longer maturities and lower interest rates. The central bank exchanged 17 billion cedis as part of this.

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Half of Ghana’s $7 Billion government debt has been erased
July 31st 2023, 3:00:45 pm

ghana-parlement
ghana-parlement
Half of Ghana's government's $7 billion debt to the central bank was written off.
The remaining balance was replaced with a 15-year bond at a reduced rate.
Debt restructuring a key step for Ghana's eligibility for a $3 billion IMF bailout loan, aims to lower overseas debt payments by $10.5 billion over three years.
Half of Ghana's government's $7 billion debt to the country's central bank has been wiped off, and the remaining balance has been replaced with a 15-year bond with a reduced rate.

This is according to a report by the American news agency Reuters, which cites three sources with direct knowledge of the transaction.

The most recent action is a component of the West African country's effort to restructure its domestic debt, which is necessary to be eligible for the next installment of a $3 billion International Monetary Fund (IMF) bailout loan. Ghana now wants to concentrate on talks with foreign creditors.

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In February, Ghana finished the first round of domestic debt restructuring by exchanging local currency bonds held by 85% of eligible holders for new bonds with longer maturities and lower interest rates. The central bank exchanged 17 billion cedis as part of this.

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The Ghanaian government is now restructuring the domestic debt of 123 billion Ghana cedis, which includes debt owing to independent power producers, the central bank, domestic U.S. dollar bonds, cocoa bills, and pension funds.

“The [central bank] had wanted to be excluded and they pushed really hard but there was no agreement,” a senior government official said. “The IMF also made it clear that we cannot achieve our target on debt restructuring if we do not include the [central bank debt].”

The official said that the non-tradable central bank debt, which included overdrafts to the government and the cocoa marketing board, a COVID-19 bond, and other legacy debt spanning 15 years, had been written off. The majority of those obligations had been paying interest at the current rate of 30%, which is the main interest rate set by the central bank.

In order to handle its greatest economic crisis in a century, Ghana, which defaulted on the majority of its foreign debt in December, plans to lower its overseas debt payments by $10.5 billion over the next three years. According to a central bank source, the bank suffered a record loss of roughly 50 billion cedis as a result of the debt restructuring.