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

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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.

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As inflation slows down, Angolan central bank maintains stable interest rate

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The central bank of Angola maintained its main interest rate at 19.5% on Friday, noting a possible short-term improvement in the supply of necessities and a possible decrease in inflation.

To contain growing inflation, which has reached 30%, the Bank of Angola hiked its main rate by 50 basis points at its most recent monetary policy meeting in May after raising it by 100 basis points in March.

The annual inflation rate increased last month, from 30.16% in May to 31.00%, although at a slower rate than in prior months.

“The decision (on Friday) was motivated by the prospect of a slowdown in the rate of price growth and an improvement in the supply of essential goods,” said Central Bank Governor Manuel Tiago Dias.

“If current conditions prevail from August onwards, we predict a slowdown in year-on-year inflation,” Tiago Dias added.

Since the middle of last year, inflation has been increasing in the nation that produces oil in Africa.

By September, the central bank will make its next move on monetary policy.

 

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Bean disease affects 81% of major cocoa region in Ghana

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The International Cocoa Organisation (ICCO) reports that 81% of a significant cocoa-producing region in Ghana, the second-largest cocoa grower in the world, is affected by swollen shoot disease.

Due to unfavourable weather and disease in leading cocoa-producing countries, Ghana and Ivory Coast, prices for the ingredient used in chocolate have nearly doubled this year.

However, expectations are growing for better production the following season. About 60% of the cocoa produced worldwide is produced by the two nations combined.

 

The data on bean disease in Ghana’s Western North, the country’s third-largest cocoa-producing region by output, cast doubt on hopes for a production rebound partly because they show how severe the outbreak is still.

Usually, within a few years, the swollen shoot virus first lowers yields before killing trees. Cocoa cannot be replanted until the sick trees are removed and the soil is treated.

The ICCO reports that 330,456 hectares of Ghana’s 410,229-hectare Western North region are contaminated. The intergovernmental agency was using information from Ghana’s cocoa sector regulator, Cocobod, through its Cocoa Health and Extension Division (CHED).

 

At an industry gathering in April, Joseph Aidoo, the chief executive of that industry regulator, said Reuters that 500,000 hectares nationwide—or 25.7% of Ghana’s 1.94 million hectares of cocoa-growing land—were afflicted.

He claimed that an additional 100,000 hectares are unproductive because of old trees and that the nation has already treated an additional 100,000 hectares, opening a new tab for swollen shoot. Replanted trees require two to four years to reach maturity and yield beans following rehabilitation.

 

“Swollen shoot is a serious problem that’s not improved in the last 12 months and is not going away,” said Steve Wateridge, a veteran world expert on cocoa and head of research at Tropical Research Services by Expana.

The Ivory Coast’s authorities have been more cautious about disclosing the full scope of the outbreak to the public, but the ICCO said that swollen shoot is also spreading there. Wateridge previously informed Reuters that the infection probably affected up to 30% of Ivorian cocoa plants.

Ghana usually produces more than 800,000 tons of cocoa annually, but due to smuggling, disease, aged trees, illegal gold mining, and climate change, it is predicted to produce just over half that amount this season.

 

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