Ghana to swap home debt in struggle to regain financial stability By Reuters

By Christian Akorlie and Cooper Inveen

ACCRA (Reuters) – Ghana will launch a home debt change on Monday, its Finance Minister Ken Ofori-Atta stated, expressing confidence that the transfer would assist restore macroeconomic stability and finish the West African nation’s worst financial disaster in a era.

Ofori-Atta stated in a video tackle on Sunday that Ghana’s authorities had completed its debt sustainability evaluation, however he didn’t present any info on plans for international debt which are anxiously awaited by worldwide collectors.

“We’re assured that these measures will contribute to restoring macroeconomic stability,” he stated.

Beneath the home debt change, native bonds will likely be exchanged for brand spanking new ones maturing in 2027, 2029, 2032 and 2037 and their annual coupon will likely be set at 0% in 2023, 5% in 2024 and 10% from 2025 till maturity.

The federal government is in talks with the Worldwide Financial Fund for a assist programme to alleviate its debt misery.

The native cedi foreign money has plummeted greater than 50% in opposition to the greenback in 2022, whereas the central financial institution hiked its foremost lending price to 27% final Monday after inflation hit a 21-year peak in October.

Ofori-Atta stated the federal government needed to minimise the influence of the debt swap on small buyers so wouldn’t apply the phrases to Treasury payments or to holders of particular person bonds. There may also be no haircut to the principal of the bonds, he stated.

“It ought to … reinforce expectations that Ghana is on its technique to an IMF staff-level settlement. We anticipate the Ghana cedi to profit in consequence,” stated Razia Khan, Chief Africa Economist at Normal Chartered (OTC:).

“There was little query that Ghana wanted LCY (native foreign money debt) coupon reductions to revive macro sustainability. By excluding retail buyers, that is more likely to be extra politically palatable,” she added.

How the plan will influence people remains to be to be decided as many maintain bonds by way of mutual and pension funds.

Ofori-Atta stated the federal government would arrange a monetary stability fund with the assist of growth companions to assist home monetary establishments, together with banks and pension funds, climate the swap.

“I say to you, nothing will likely be misplaced, nothing will likely be lacking, and nothing will likely be damaged. We are going to, collectively, recuperate all,” he stated.