Gov’t announces Consent Solicitation Launch as next step in debt restructuring pact with bondholders
Finance Minister Dr. Amin Adam has announced that following the debt restructuring agreement with Eurobond holders, which included a 37% principal haircut and generated $4.4 billion in savings for the country, the government is preparing to launch the consent solicitation and exchange memorandum on the international capital market.
According to the Finance Minister, the process is expected to start in July and conclude by September this year.
Making the assertion during a joint press briefing with the IMF and Bank of Ghana on Monday, July 1, 2024, the Finance Minister urged Ghana’s Bondholders to accept the terms agreed in principle on the debt restructuring agreement.
“We remain committed to engaging and resolving our non-bonded commercial indebtedness to bondholders,” he quipped.
In a consent solicitation, an issuer seeks the consent of holders of its debt securities to amend terms of those debt securities and/or waive existing breaches or defaults.
After several rounds of negotiations on proposals and counterproposals on the Eurobond treatment, Government reached agreement on both the financial and non-financial terms on June 19, 2024.
Government successfully negotiated a 37 % nominal principal haircut, equivalent to a 45% market value loss, with no contingent compensation mechanism as seen in the Zambia and Sri Lanka cases.
The debt cancellation involved is $4.7 billion and debt service savings from 2023 to 2026 is $4.4 billion.
This achievement is significant, given the ambitious timeline and the fact that it is the fastest agreement reached under the Common Framework since its inception in 2020.
The time from public announcement of an intention to restructure to when an agreement in principle is reached for Ghana was 18 months compared to Mozambique (30 months), Suriname (30 months), Chad (20 months), and Sri Lanka (ongoing for 2 years and 2 months so far.
The IMF has confirmed that the terms of the agreement are consistent with programme parameters. The OCC secretariat has also assessed the terms and confirmed that the Agreement in Principle provides a solid basis for consultation with its members for collective assessment of the comparability of treatment principles.
According to the Finance Chief, while the restructuring process has been challenging, Government deliberately chose to implement an economic reset, recognizing that starting anew in the post-COVID-19 pandemic and global inflation era would provide Ghana with the best opportunity to achieve sustainable growth and development.
