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Ghana agrees $1.36 billion local debt restructuring with banks

Published

1 year ago

June 28, 2023

Ghana has agreed to a deal to restructure its local debt with banks, a total of 15 billion Ghana Cedis ($1.36 billion) of locally issued US dollar bonds and cocoa bills.

Domestic dollar bonds, cocoa bills, pension funds, and debt to the central bank are included in the debt to satisfy the short-term liquidity requirements of the nation’s cocoa regulator, Cocobod.

The government and the lenders have agreed to convert 6.9 billion Ghana Cedis worth of domestic US dollar bonds into two-term loans with new lower rates, according to sources in the finance ministry and a local bank that holds some of the bonds.

Last week, Finance Minister, Ken Ofori-Atta hinted that his country intends to complete its debt restructuring deals soon and the process of getting a memorandum of understanding (MoU) with the creditors was on.

The sources at the ministry confirmed that the memorandum of understanding for the domestic US dollar bonds was with the Securities and Exchange Commission for approval. “Our target is to conclude it by the end of June.”

“They (the banks) understand that they are better off getting a restructuring because we may not be able to pay the coupon,” the other finance ministry source said.

Even though some banks are hanging out for 13%, another 8.1 billion Ghana Cedis worth of cocoa bills will be transformed into a new bond with a 12% return, according to the banking source.

To be able to fulfill an International Monetary Fund (IMF) deadline and concentrate efforts on negotiations with foreign creditors, Ghana is hoping for new terms for the restructuring of its domestic debt after the first phase of its domestic debt exchange ended in February with 85% of eligible bondholders participating.

Ghana has defaulted on both its local and international debt with its creditors, mainly China, the World Bank, and the International Monetary Fund, and has in recent years been occupied with restructuring its debt. Elsewhere in southern Africa, Zambia also recently agreed to debt restructuring with its international creditors.

Related Topics:Featured Ghana Ken Ofori-Atta

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IMF mission concludes 4th loan program assessment in Egypt

Published

2 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.