The Government has announced the suspension of all debt service payments for some of its external debt, including the payments on Eurobonds, commercial term loans, and most bilateral debts.
The exercise forms part of the Government’s effort to restructure its debt for the Management and Executive Board’s approval for a $3billion International Monetary Fund (IMF) support programme to restore macroeconomic stability amid the current economic hardship.
A press release from the Finance Ministry, copied to the Ghana News Agency, on Monday, explained that it would not include the payments of multilateral debts, new debts (whether multilateral or otherwise) contracted after December 19, 2022, or debts related to certain short-term trade facilities.
It added that: “The Government stands ready to engage in discussions with all of its external creditors to make Ghana’s debt sustainable through a fair, transparent and comprehensive debt restructuring exercise in line with international best practices.”
The Ministry said the move was an added emergency measure necessary to prevent a further deterioration in the economic, financial, and social situation in Ghana.
This was because the country’s financial resources, including the Bank of Ghana’s international reserves, had become limited and needed to be preserved.
Ghana is currently having a GHS137.3 billion debt exchange programme, in which domestic bondholders have been asked to exchange the existing for new ones.
The deadline for the exchange, which excludes in dividual bondholders is now Friday, December 30, 2022.
Interest on the new bonds would not accrue until 2024, starting at a five per cent rate in that year, moving up to 10 per cent in 2025. The first interest payment on each bond would be made on June 30, 2024.
It has also completed q Staff-Level Agreement (SLA) with the IMF for a loan-support programme aimed at on a restoring macroeconomic and debt sustainability, preserve financial stability, while most protecting vulnerable.
The Government has encouraged its creditors to respond in an expedited manner, to ensure that the IMF-supported programme is adopted by the IMF Board as soon as possible in early 2023.