Ghana talks with external bondholders due in a few weeks

By Christian Akorlie

ACCRA (Reuters) – Substantive discussions with Ghana‘s external bondholders are due to start in the next few weeks, the country’s Finance Minister Ken Ofori-Atta told parliament on Thursday.

Embattled Ghana has to restructure its debt to secure a $3 billion International Monetary Fund (IMF) bailout, which Ofori-Atta said the government hoped to secure in March.

Around 85% of eligible bondholders registered for a long-delayed domestic debt exchange programme this week, after several extensions and revisions to the terms.

Eligible bondholders held 97.7 billion cedis ($8.1 billion) of government bonds originally slated for restructuring that were worth 130 billion cedis at the end of December, Ofori-Atta said, with pension funds excluded after unions threatened a general strike.

Individual bondholders aged under 59 and collective investment schemes accounted for 6.06% of the tendered eligible bonds, individuals over 59 for 0.43% and other holders, including banks and insurance firms, for 78.41%, he said.

The government must now get commitments from its external creditors to a debt restructuring to secure IMF executive board approval for the rescue package.

“We have started the process of negotiating in good faith with our commercial creditors through preliminary discussions and exchange of information,” Ofori-Atta said.

The commercial creditor committee had committed to assessing Ghanas request for debt relief by the end of February, he said.

At the end of November, a third of Ghanas 575.7 billion cedi ($48.4 billion) debt was domestic, according to the central bank, while external debt was $29.2 billion. The country owes about $13 billion to international bondholders.

“We hope our commercial creditors will understand our desire to negotiate with our bilateral creditors softer terms than the ones we anticipate to propose to them, as a speedy process with the bilateral creditors is needed to pave the way for the discussion with private creditors,” Ofori-Atta said.

Ghana, where a deep economic crisis has seen inflation and the governments debt servicing costs spiral, has requested a bilateral debt restructuring under the Common Framework, a process set up during the COVID-19 pandemic by the Group of 20 leading economies.

“We made it known that we expect the (bilateral) creditor committee to be formed in an expeditious way … to ensure that we are able to go to the Funds board in March,” Ofori-Atta said, of the meeting, co-hosted by the Paris Club of creditor nations, where the request was presented.

“We are also approaching major creditors like India and China to ensure that our discussions with the Paris Club is accelerated.”

China is Ghanas biggest bilateral creditor with $1.7 billion of debt, while Ghana owes $1.9 billion to Paris Club members, according to data from the Institute of International Finance.

($1 = 12.0000 Ghanaian cedi)

(Reporting by Bate Felix and Christian Akorlie; Writing by Sofia Christensen and Rachel Savage; Editing by James Macharia Chege, Christina Fincher and Shounak Dasgupta)