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

By Christian Akorlie and Cooper Inveen

ACCRA (Reuters) – Ghana will launch a home debt alternate 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 technology.

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

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

Below the home debt alternate, native bonds might be exchanged for brand spanking new ones maturing in 2027, 2029, 2032 and 2037 and their annual coupon might 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 help programme to alleviate its debt misery.

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

Ofori-Atta stated the federal government wished to minimise the influence of the debt swap on small traders 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 solution to an IMF staff-level settlement. We count on the Ghana cedi to profit in consequence,” stated Razia Khan, Chief Africa Economist at Commonplace Chartered (OTC:).

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

How the plan will influence people continues 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 help of improvement companions to assist home monetary establishments, together with banks and pension funds, climate the swap.

“I say to you, nothing might be misplaced, nothing might be lacking, and nothing might be damaged. We’ll, collectively, get better all,” he stated.