Ghana Approaches Completion of Long-Running Debt Restructuring, Reports Reuters

Ghana has secured approval from over 90% of its bondholders to restructure and exchange $13 billion of international debt, effectively overcoming the final obstacle in its lengthy debt restructuring process.

Here’s a condensed timeline of significant events leading up to this point:

• February 2022: Credit ratings agency Moody’s downgrades Ghana’s credit rating, citing a "very high credit risk." Fitch had previously lowered Ghana’s rating from B to B- the month before.

• March 2022: Ghana’s central bank raises interest rates by a record 250 basis points to 17% to combat soaring inflation and a declining currency.

• May 2022: The then-Finance Minister, Ken Ofori-Atta, declares that Ghana will manage its debt without support from the International Monetary Fund (IMF).

• July 1, 2022: The Ghanaian government reverses its stance and seeks a loan from the IMF in response to public protests over worsening economic conditions.

• July 20, 2022: Parliament authorizes a $750 million loan from the African Export Import Bank to avert a potential default.

• August 2022: The central bank implements another significant interest rate hike as inflation continues to rise.

• December 5, 2022: The government initiates a domestic debt exchange program to address escalating debt obligations.

• December 12, 2022: Ghana and the IMF reach a "staff-level agreement" for a $3 billion rescue package, with debt restructuring as a key condition.

• December 20, 2022: The government announces its intention to default on most external debt.

• December 22, 2022: Local pension funds are exempted from the domestic debt exchange following threats of a general strike from unions.

• January 2023: Ghana formally requests a debt restructuring under the G20’s Common Framework process, established in response to the COVID-19 pandemic.

• February 2023: The finance ministry reports that the domestic debt exchange concluded with around 85% of eligible bondholders participating, after multiple deadline extensions.

• March 2023: The government enters debt restructuring discussions with holders of approximately $13 billion in international bonds.

• May 2023: Ghana’s official creditors form a committee co-chaired by China and France, committing to restructure their loans, which facilitates IMF board approval of the $3 billion rescue loan.

• June 2023: The government presents a restructuring proposal to its official creditors, aiming to reduce $10.5 billion in interest payments over three years.

• October 2023: Ghana and the IMF reach a staff-level agreement concerning the initial review of the $3 billion loan program. A second $600 million payout depends on establishing a debt rework plan with official creditors, with the finance ministry suggesting a 30-40% haircut for bondholders, resulting in a decrease in bond prices.

• January 2024: Ghana finalizes a deal-in-principle to restructure $5.4 billion of debt owed to official creditors, with the IMF approving the next loan tranche shortly thereafter.

The government informs international bondholders that it prefers a straightforward debt restructuring rather than implementing "state-contingent debt instruments" tied to factors such as economic growth or commodity prices.

• February 2024: The president appoints Mohammed Amin Adam as the new finance minister, replacing Ken Ofori-Atta, with a commitment to continue the IMF program.

• March 2024: Formal negotiations commence between Ghana and the international bondholder group.

• April 2024: Ghana and bondholders fail to reach an agreement, with the government asserting that the proposals were insufficient to reduce debt to a sustainable level as per IMF standards.

• May 2024: The government confirms receipt of a draft memorandum of understanding from its bilateral creditors. Upon signing, this document will formalize the $5.4 billion agreement with nations like France and China.

• June 2024: Ghana and international bondholders come to an agreement in principle regarding the restructuring of dollar bonds.

• September 2024: Ghana initiates its consent solicitation and bond exchange offer to investors.

• October 2024: The government announces that more than 90% of investors approved the restructuring of the bonds following the exchange offer.