VenturesNow

Ghana’s bondholders, govt to discuss debt restructuring next week

Published

1 week ago

June 15, 2024

Following a deal struck with official creditors earlier this week, Ghana and its bondholders will resume negotiations next week to work out a debt restructuring plan for $13 billion in foreign notes, according to four sources cited by Reuters.

Ghana, a producer of cocoa and gold, failed to pay back the majority of its $30 billion in external debt in 2022 due to the COVID-19 pandemic, the conflict in Ukraine, and sharp increases in interest rates worldwide that increased the cost of borrowing. It had initiated formal negotiations in mid-March with two groups of bondholders: one comprising regional African banks and another of Western asset managers and hedge funds.

However, due to the planned deal’s failure to meet the requirements of the International Monetary Fund’s debt sustainability analysis (DSA), negotiations came to a standstill in April. Currently, both parties are under pressure to finalize an agreement before the elections in December.

Hours after the government and official creditors wrapped up their agreement on Tuesday, according to people familiar with the matter who spoke with Reuters, government advisors had gotten in touch with their counterparts at the bondholder organization.

The individuals, who wished to remain anonymous, claimed that the government advisors provided information on both the official creditor agreement and specifics from the most recent debt sustainability review from the IMF.

“People are incentivized,” one of the sources said. “Things can happen quickly.”

An official response is yet to be grated by Ghana’s Finance Ministry on the disclosure. Meanwhile, financial advisors are presently examining the given information, according to two of the sources, who also stated that it will serve as the basis for discussions starting next week.

Prior negotiations to establish an agreement that satisfied the IMF’s debt-sustainability targets, which were outlined in the initial assessment of the fund’s $3 billion loan program with Ghana, broke down with two parties that held about $13 billion of the country’s foreign bonds.

Nevertheless, given that Ghana’s economy has since recovered, two sources stated that they anticipated the agreement would be in line with the fund’s modified DSA in light of the second review’s conclusion in early April.

VenturesNow

IMF grants nearly $900 million to boost Tanzania’s budget

Published

2 days ago

June 22, 2024

Ifeoluwa Dada

In addition to concluding an additional inquiry permitting the transfer of $149.4 million for budget support, the International Monetary Fund (IMF) said on Saturday that its executive board had approved funding for Tanzania totalling $786.2 million to address climate change.

The IMF stated in a statement that Tanzanian authorities are dedicated to carrying out reforms to maintain macro-financial stability, bolster economic recovery, and foster sustainable and inclusive growth.

The administration of President Samia Suluhu Hassan has implemented several economic reforms over the past three years to bring the nation’s real gross domestic product growth rate back to the 6% to 7% range seen before the pandemic.

The multilateral body noted that Tanzania’s economic reform program was still robust and that the country’s economy expanded again in 2023 after contracting in 2022.

“The current account deficit is narrowing, reflecting fiscal consolidation, easing commodity prices, and tight external financing conditions,” the IMF said.

Although the economy is predicted to continue to recover, the IMF stated that there were obstacles due to an “unfavourable global economic environment.”

According to the World Bank, Tanzania’s economy—which is based on tourism, mining, agriculture, and manufacturing—has persevered in the face of repeated catastrophic weather events and climate change because of a growth in the services sector.

As of last week, Kitila Mkumbo, the minister of state in the president’s Office for Planning and Investment, predicted that the economy will accelerate to 5.4% this calendar year from 5.1% in 2023.

VenturesNow

Sources reveal Ghana, bondholders reach agreement for $13bn debt restructuring

Published

2 days ago

June 22, 2024

Ifeoluwa Dada

Following a deal struck with official creditors earlier this month, Ghana has secured an agreement in principle with its bondholders for the restructuring of $13 billion in foreign debt, according to three sources quoted by Reuters.

According to two of the sources, bondholders will get a haircut on the principal of up to 37% as part of the transaction, and the bonds’ term will be extended. Under the weight of the COVID-19 pandemic, the conflict in Ukraine, rising global interest rates, and soaring debt, the West African country that produced gold and cocoa went into default on the majority of its $30 billion in foreign debt in 2022.

Ghana, like Zambia, enrolled in the G20 Common Framework’s debt treatment program. This program’s objectives are to speed up debt restructurings and include China, the newest significant bilateral lender, in the process. After Zambia, the first African nation to default during the pandemic became the first copper producer in southern Africa, its bondholders approved the restructuring earlier this month.

“Things are pretty close” for Ghana. A source who wished to remain anonymous stated, “We can anticipate an announcement by next week, as they were not authorized to speak to the media.”

According to the other two sources, the news might be released as early as this Friday. Due to the late hour, it was not possible to quickly reach the Paris Club, an alliance of creditor nations, or Ghana’s finance ministry for comment.

In mid-March, Ghana initiated formal negotiations with two groups of bondholders: one comprising regional African banks and another of Western asset managers and hedge funds.

However, the proposed agreement did not satisfy the requirements of the International Monetary Fund’s (IMF) debt sustainability analysis, causing the negotiations to break down in April and forcing both parties to reorganize to come up with a workable solution.

According to the three individuals, the agreement in principle was reached because it later aligned with an updated IMF debt framework on Ghana that was previously disclosed to bondholders.

The second-largest cocoa producer in the world signed an agreement with its official creditor committee earlier this month to formalize a debt restructuring agreement that was negotiated in January.

The agreement’s broad contours made it possible for the IMF executive board to convene on June 28 in Ghana to discuss a second assessment of the country’s $3 billion loan, a three-year package, and the release of the subsequent $360 million tranche.