External Debt Restructuring: Ghana, OCC to reach an agreement next week – Finance Minister
Finance Minister Ken Ofori-Atta, has noted that Government and the Official Creditor Committee (OCC) co-chaired by France and China are expected to reach an agreement next week.
The agreement will then be followed by an MoU signing between Government and the OCC.
Making the assertion during the 2024 budget statement presenatation on Wednesday, November 15, 2023, the Minister noted that Government has already shared illustrative debt restructuring scenarios with the OCC.
“An agreement in principle on the restructuring parameters is expected to be reached in the coming week. This will be formalised in an MOU between the Government and the OCC,” quipped the Minister.
Regarding the country’s commercial debt (Eurobonds), the Minister noted that Government has received illustrative proposals on the debt treatment scenarios from the two bondholder groups.
“We are currently reviewing the illustrative proposals and expect to converge towards a solution in compliance with the comparability of treatment principle. We outlined broad parameters in our investor presentation of a haircut between 20% and 40%, a maximum 5% interest rate and maturity not to exceed 20 years,” he noted.
“It is envisaged that, in the coming weeks, extensive negotiations with both groups will commence and ensure we achieve the targets set under the IMF/World Bank Debt Sustainability Framework. We are hopeful of a year-end
resolution,” he added.
Fitch Ratings however, anticipates that an accord with private creditors (eurobond holders) on comparable terms would be achieved by mid-2024.
These agreements with the OCC and Eurobondholderrs, Fitch noted, are seen as pivotal in facilitating Ghana’s exit from its current default status.
Ghana secured approval from the IMF Executive Board for a $3 billion Economic Credit Facility arrangement on May 17, 2022, following the establishment of the Official Creditor Committee for external debt treatment.
To restore debt sustainability, the IMF has called for a reduction of approximately 30% in Ghana’s public sector external debt of $29bn.
