Ghana’s long-term debt restructuring took another step towards the finish line on Monday, after the government said it had reached an agreement in principle to recast the debt with holders of Eurobonds worth about $13 billion.
Below is a brief timeline of key events:
2022
- February – Credit rating agency Moody’s lowered Ghana’s rating from “B3” to “Caa1”, and said that the country has “very high credit risk”, after Fitch agency lowered its credit rating for the country to “B-” ( B-) from “B” in January of the same year.
- March Ghana’s central bank raises interest rates by a record 250 basis points to 17%, in an attempt to stem skyrocketing inflation and currency weakness.
- April The parliament of the cocoa-producing country approves the imposition of an “electronic” tax on electronic payments.
- May – Ghana’s then Finance Minister Ken Ofori-Atta says Ghana will manage its debt without IMF help.
- July 1 – The government of Ghana changes its mind and negotiates with… International Monetary Fund To obtain a loan amid street protests against increasing economic hardship.
- July 20 Ghana’s parliament has approved a $750 million loan from the African Export-Import Bank as it strives to avoid a default.
- August Ghana’s central bank implements another record increase in interest rates, as inflation continues to rise.
- December 5 – Ghana launches a domestic debt exchange in a bid to deal with spiraling debt payments.
- December 12 Ghana and the International Monetary Fund reach an “expert-level agreement” on a $3 billion rescue package, with debt restructuring.
- December 20 Ghana says it will default on most of its external debt.
- December 22 Exempting local pension funds from the local debt exchange after unions threatened a general strike.
2023
- January – Ghana is requesting a debt restructuring under the G20 Common Framework Process, which was established in response to the Covid-19 pandemic to include China, India and other creditor countries. And not in the Paris Club of rich lending countries.
- February Ghana’s Ministry of Finance says its domestic debt exchange has closed with about 85% of “eligible” bondholders participating, after five deadline extensions. While the country’s official bilateral creditors began talks to form a committee.
- March The government of Ghana and a group of Eurobond holders have begun debt restructuring talks About 13 billion dollars Through their advisors.
- May Ghana’s official creditors form a committee chaired by China and France, and commit to restructuring their loans to the country. These “financing guarantees” pave the way for the IMF Board of Directors to approve a $3 billion rescue loan five days later.
- June Ghana sends its restructuring proposal to official creditors, aiming to reduce $10.5 billion in interest payments over the next three years.
- October Ghana and the International Monetary Fund reach an agreement at the expert level on the first review of the loan program worth $3 billion, with a second compensation payment of $600 million on the condition of agreeing on a debt recast plan with official creditors. The Ministry of Finance proposes a discount of 30% to 40% for bondholders; Bond prices fall in response.
2024
- January 12 – Ghana reaches a preliminary agreement to restructure $5.4 billion worth of debt to its official creditors, with the IMF later agreeing to pay the next loan a week later. The government tells bondholders abroad that it wants simple debt restructuring rather than using any “conditional state debt instruments”, which link payments to variables such as economic growth or commodity prices.
- February Ghana’s president replaces Ken Ofori-Atta as finance minister with his deputy, Mohamed Amin Adam, who pledged to keep the IMF program on track.
- March Ghana and the International Bondholders Group begin formal talks.
- April Ghana and its bondholders failed to reach an agreement, as the government said that the proposals presented were not broad enough to reduce its debt to a level considered sustainable by the International Monetary Fund.
- May – The Ghanaian government has confirmed receipt of a draft memorandum of understanding from its bilateral creditors. Once signed, the memorandum will formalize a $5.4 billion agreement reached in January 2024 with countries including France and China.
- June Ghana and its international bondholders reach an agreement in principle to restructure its dollar bonds.
