VenturesNow

Ghana, official creditors close to MoU on debt restructuring

Published

2 months ago

June 9, 2024

According to two individuals quoted by Reuters, Ghana and its official creditors have resolved the main points of a debt restructure and will shortly sign a draft memorandum of agreement, which is a crucial step needed to obtain further financing from the International Monetary Fund (IMF).

The document formalizes a tentative agreement to restructure $5.4 billion in debt that was made in January with government creditors, including China and France. The West African country is attempting to navigate its way out of the worst economic crisis in a generation.

Establishing an MoU will enable the IMF executive board to convene and authorize the $360 million payment under Ghana’s $3 billion rescue plan, which is anticipated to take place later this month.

One person with knowledge of the situation stated that all significant difficulties had been resolved and that the only remaining steps were to finalize some precise wording. The sources stated that the agreement was likely to be signed in a few days. An inquiry for comment was not immediately answered by a representative for Ghana’s Finance Ministry.

Amid skyrocketing servicing expenses, Ghana defaulted on the majority of its foreign debt in December 2022, following Zambia into post-COVID default. Remaining in default makes it more difficult for the government to get outside financing and escape a dire economic situation.

Ghana, like Zambia, agreed to undergo debt treatment under the G20 Common Framework, a procedure meant to speed up debt restructurings and include China, the newest major bilateral lender, in the process. Earlier this week, bondholders in Zambia approved the restructuring after the southern African copper miner missed payments due to the COVID-19 outbreak.

The World Bank and other international organizations, as well as creditors, are keen to hasten Ghana’s debt restructuring and believe that the country’s nearly four-year-long, erratic struggle out of default offers valuable lessons for Ghana.

In addition to restructuring the majority of its domestic debt, Ghana must also come to an understanding with the holders of over $13 billion in foreign bonds.

Ghana’s national debt-to-GDP ratio was expected to decrease by 15% between 2023 and 2028. According to this estimate, the percentage will have decreased annually for six years, reaching 69.96% in 2028.

The majority of the country’s foreign debts were not repaid by December 2022 because the costs had risen too high. However, it now needs to negotiate a settlement with individuals who own foreign bonds worth roughly $13 billion. The majority of its domestic debt has also been modified.

Related Topics:debt rework Featured Ghana

Click to comment

VenturesNow

Nigeria has received $10.9 billion multi-sector investments from AfDB— Official

Published

4 days ago

July 23, 2024

Ifeoluwa Dada

Nigeria has received $10.9 billion from the African Development Bank (AfDB), comprising $4.9 billion in public and private sector initiatives.

AfDB Director-General of the West Africa Region, Lamin Barrow, said the bank’s Nigeria funding approvals total $10.9 billion since it started operations.

Barrow made the revelation at the Second Interactive Session and Workshop on Developing Bankable Business Proposals/Business Plans for Youths in Agriculture in Abuja on Monday.

It was part of the bank’s 60th anniversary celebrations with stakeholders. Nigeria is the AfDB’s largest shareholder, and the bank’s relationship with it has grown, Barrow said.

The AfDB invests in Nigeria’s energy, power, transport, water, and sanitation infrastructure.

“Over the last 60 years, the Bank has grown into a trusted partner and the continent’s premier development financial institution.

“Our cooperation with Nigeria has expanded over the years, especially considering that Nigeria is the largest shareholder.

“Since it started operations in the country, cumulative financing approvals have reached 10.9 billion dollars and our portfolio currently stands at 4.9 billion dollars supporting projects in the public and private sectors,” he said.

After taking office eight years ago, AfDB President Dr Akinwumi Adesina prioritized the High 5—Power, Feed, Industrialize, Integrate, and Improve Africa’s quality of life—Barrow added. He said these were accelerators for achieving the SDGs and Agenda 2063 ambitions. The projects and programs supported during this time have reportedly affected over 400 million individuals.

VenturesNow

Analysts expect Egypt’s economy to rise 4.0% in 2024/25

Published

4 days ago

July 23, 2024

Ifeoluwa Dada

A recent study that sampled seventeen economists by Reuters has predicted slower economic growth for Egypt in April after a $8 billion IMF accord in March.

The median projection for GDP growth in the fiscal year starting July 1 was 4%, down from 4.35% in April and 4.15% in January.

The poll predicted the GDP grew 2.9% in the fiscal year ending June 30. This is below their April and January predictions of 3% and 3.5%. Poll: 2025/26 growth should rise to 4.99%.

After the IMF agreement, Capital Economics’ James Swanston predicted slower growth due to tighter fiscal and monetary policies and a weaker pound.

“The overall net impact is that economic growth will be weaker this fiscal year, but there are reasons to be more optimistic on GDP growth from FY2025/26 onward,” Swanston said.

Egyptian tourism and Suez Canal revenue have slowed due to the Gaza crisis, which has cut Egypt’s foreign revenue by more than half.

Egypt’s planning ministry predicted 4.2% growth in 2024/25 on June 2. Analysts expect the Egyptian pound to fall to 49.50 per dollar by June 2025 and 52.50 by June 2026.

Before dropping it in March 2024, the central bank kept the pound at 30.85 per dollar. It’s roughly 48.40 per dollar.

The survey forecast 20.5% headline inflation in 2024/25 and 12.05% in 2025/26. In June, inflation dropped to 27.5% from a record high of 38.0% in September, exceeding the central bank’s objective of 5%-9%.

The analysts expect the central bank’s overnight lending rate to drop to 21.25% by June 2025 and 15.25% by June 2026.

Foreign money shortages have slowed the Egyptian economy. However, a $24 billion real estate transaction with the UAE in late February, a significant currency devaluation, and a $8 billion IMF accord in early March have mitigated that.