Ghana has failed to strike a deal with two groups of international bondholders to restructure $13 billion of debt, the government of the West African nation said on Monday, dealing a blow to its efforts to swiftly emerge from default and economic crisis.
Talks were derailed for now amid indications from the International Monetary Fund (IMF) that the agreement was not going to be in line with their debt sustainability parameters, which set out how much debt it thinks a country can afford, the government said in a statement.
A “regional” African bondholder group had also rejected part of the proposed rework, including a “PAR option” to retain the original value of the bonds with a longer maturity and lower coupon.
In December 2022, Ghana, the world’s second-biggest cocoa producer, defaulted on most of its external debt of $30 billion, after debt costs and inflation surged when it was locked out of international markets.
“The Government is actively working on solutions that it believes would be consistent with IMF program parameters under the set of policies currently being discussed, with the objective of reaching a mutual agreement acceptable to all parties,” Ghana’s government said in the regulatory statement.
It said the talks held between March 16 and April 12 had been “constructive”.
There are two groups of holders of Ghana’s international bonds, one “international” group of western asset managers and hedge funds and the other including regional African banks.
Ghana is “confident… at some point” it will reach a deal with bondholders, Finance Minister Mohammed Amin Adam told a press conference on Saturday, without giving a timeline.
The IMF’s Ghana mission chief Stephane Roudet told the joint press briefing, held to coincide with the end of the IMF’s second review of its $3 billion loan programme with Ghana, that the fund needed to continue to see progress in talks with bondholders.
The proposed bondholder deal included a heavily discounted option of three bonds maturing between 2030 and 2038 with coupons of 5% until 2027 and 6.5% after. The “PAR option” would have matured in 2043, with a 1.5% coupon.
Bondholders who signed up to either proposal would have also received a separate bond representing accrued “Past Due Interest”.
Some bondholders had favoured the use of so-called state-contingent debt instruments, which could increase payouts if Ghana’s economy performs better on agreed metrics, as a way of bridging differences in their outlook on a country’s economic trajectory.
