The Ministry of Finance has reached an agreement with commercial banks in Ghana to restructure GH¢15 billion ($1.36 billion) of domestically issued U.S. dollar bonds and cocoa bills, as reported by Reuters, citing three anonymous sources familiar with the negotiations.
A source from the finance ministry stated, “They (the banks) understand that they are better off getting a restructuring because we may not be able to pay the coupon.”
This decision by the Ghanaian government to pursue a second round of domestic debt restructuring is motivated by a June timeline, aiming to meet a deadline set by the International Monetary Fund (IMF) as part of their conditionality. Ghana intends to engage external creditors in the debt restructuring process.
Despite successfully concluding the first phase of the Domestic Debt Restructuring Exercise Program (DDEP) in February, with approximately 85 percent of eligible bondholders participating, Ghana now needs to establish new terms for an additional GH¢123 billion ($11.18 billion). This is necessary to fulfill the requirements for the second tranche of the $3 billion Extended Credit Facility from the IMF.
According to Reuters’ sources familiar with the negotiations, the second phase of the DDEP will involve restructuring domestic dollar bonds, cocoa bills, pension funds, and debt owed to the central bank. The sources also mentioned that the Ghanaian government and lenders have agreed to convert approximately GH¢6.9 billion worth of domestic U.S. dollar bonds into two-term loans with reduced interest rates.
Additionally, Reuters reports that around GH¢8.1 billion worth of cocoa bills will be converted into a new bond offering a 12 percent yield, although certain commercial banks are requesting a 13 percent yield. As of February 2023, the most recent cocoa bill issued by the cocoa regulator, COCOBOD, had a yield of 32.22 percent.
Reuters emphasized that requests for comments on the matter from the Finance Ministry and COCOBOD were declined.
The new terms of the loans, according to the three anonymous sources, include a five-year maturity period commencing in 2025. These sources spoke on the condition of anonymity as they are not authorized to discuss the matter publicly.
