Ghana secured a $4.7 billion haircut from Eurobond holders, paving the way for the country to receive the next tranche of $360 million IMF funding soon.
The $4.7 billion represent 37% of a $13 billion debt being debt restructured to pave the way for more IMF funding.
After extensive talks, Ghana’s institutional bondholders agreed to a 37% reduction on their principal and extend bond maturities until March 2027.
Ghana’s story has been one of grit as the country continues to rebound from its economic slump in 2022 where it defaulted on most of its $30 billion external debt.
The country’s progress with creditors now paves the way for securing the $360 million tranche in International Monetary Fund (IMF) funding.
Ghana eurobond-holders are presented with two options: one is the “DISCO” bond option, where investors receive 5% interest rate on new bonds from January this year until July 2028, then 6% thereafter. The other is the “PAR” option, where investors will get 1.5% interest on bonds without any haircut.
Eurobonds are external bond instruments denominated in a currency other than the local currency of the country or market in which the bonds are issued.
This agreement comes after the IMF rejected an earlier proposal in April for not meeting debt sustainability requirements. The current deal is expected to provide $4.4 billion in cash flow relief for Ghana during the IMF loan programme.
The deal follows a similar agreement between Zambia and its creditors in March to restructure $3 billion in eurobonds.
Since 2022, Ghana has rallied to improve its economic situation. The country’s economy grew by 2.9% in 2023, surpassing the IMF’s 1.5% estimate. This growth, coupled with the debt restructuring, aims to reduce Ghana’s debt-to-GDP ratio from 109% to 55% by 2028.