Ghana, IMF ends 2-week long negotiations tomorrow
Ghana ends its two-week-long negotiations with the International Monetary Fund (IMF) for a Staff Level Agreement tomorrow, Tuesday, December 13, 2022.
It is expected that, the government delegation led by the country’s Finance Chief, Ken Ofori-Atta will be able to secure a deal from the IMF.
A deal from the IMF is expected especially given the fact that the government has accepted and started the rollout of the Domestic Debt Exchange Programme (DDEP) which is expected to help restore the country’s public debt to a sustainable level.
In total, a whooping GHS 137bn in domestic bonds is expected to be exchanged for the ‘new bonds’ by government.
GHS denominated Notes and Bonds issued by the Republic of Ghana accounts for the largest portion of the domestic debt being GHS 126bn in total value.
GHS denominated bonds issued by E.S.L.A. Plc and Daakye Trust Plc account for GHS 8.3bn and GHS 2.7bn respectively of the total domestic bond value.
According to the Finance Ministry, payments of principal value of the ‘new bonds’ will be made per government’s “Exchange Consideration Ratios” where 17% of principal value of bonds will be paid at end-2027; another 17% paid at end-2029; 25% paid at end-2032 and the final 41% paid at end-2037.
Annual coupons on the ‘new bonds’ government asserts, will be set at 0% in 2023; 5% in 2024 and 10% from 2025 until maturity.
DDEP necessary for $3bn IMF deal
Finance Chief Ken Ofori Atta, has revealed that the Domestic Debt Exchange Programme (DDEP) by government is a necessary requirement for a deal with the IMF.
According to him, the government has no choice but to undertake the debt restructuring programme to put the country’s debt level on a sustainable path.
In a press briefing on Monday, December 5, Finance Chief Ofori-Atta noted that no individual bondholder will lose their funds in the proposed programme, further assuring financial sector players of government’s support to minimise the impact of the programme on their activities.
Currently, Ghana is seeking an economic programme from the IMF to address its balance of payment and other financing challenges.
