Gov’t Disburses $520 Million to Eurobond Holders as Ghana Resumes Eurobond Debt Servicing

Gov’t Disburses $520 Million to Eurobond Holders as Ghana Resumes Eurobond Debt Servicing

The Government of Ghana has resumed servicing its Eurobond debt after concluding a restructuring agreement with bondholders last week. A total of $520 million has been paid, comprising $120 million in consent fees to incentivize bondholders who participated in the debt exchange program and $320 million in frozen coupon payments, which had been suspended since 2022.

The consent fee, amounting to $10 per $1,000 of principal, was offered as part of the government’s efforts to secure near-universal participation in the debt exchange. Analysts described the move as a strategic incentive to encourage holders to swap their old bonds for new ones under the revised terms.

Ghana’s resumption of debt payments follows the successful restructuring of $13 billion in Eurobond liabilities. The restructuring was a key step in addressing the country’s fiscal challenges and restoring market confidence. The coupon payments, previously suspended under the debt service moratorium, are scheduled to resume in January 2025, with a subsequent payment expected in July 2025.

The Bank of Ghana has built sufficient reserves—reported at $7.5 billion, or 3.4 months of import cover, by the end of August 2024—to support the government’s debt servicing obligations. Meanwhile, bilateral debt repayments are slated to begin in 2026, with the Ministry of Finance considering the establishment of a Sinking Fund to manage future obligations and reduce the fiscal strain.

The resumption of debt servicing comes as a crucial step for Ghana as it seeks to regain investor confidence and stabilize its economic position following the recent debt restructuring efforts.