Swift Ghana bondholder deal can redeem dimming faith in G20 common market framework, says Standard Bank
Standard Bank in its 2024 Economy Report, asserts that a swift deal between private and commercial creditors (eurobond holders) and the country can redeem the “dimming faith” in the G20 Common Market Framework.
The assertion by the Bank in its report is premised on the fact that nearly four years later, questions are now arising as to whether the common market framework needs to be significantly refined or shelved altogether, as skepticism towards it grows.
The skepticism has to do with the many challenges and setbacks Zambia has had to face in restructuring its debt under the Framework.
“It is natural to expect both creditor groups to seek their pound of flesh in these negotiations but, if an agreement between the OCC and bondholders is not secured in 2024, it will be a huge blow to the common market framework and perhaps may dissuade other economies from contemplating external debt defaults in the absence of a better solution.
“Official creditors broadly believe that bondholders already benefited from not participating in the 2021 Debt Service Suspension Initiative (DSSI). Under our base case scenario, we see Zambia securing an external debt restructuring deal, that will be acceptable to both creditor groups, in H2 2024,” said the report.
“However, Ghana can still save face for the common market framework,” it added.
The Government of Ghana reached a deal with the OCC in early Jan 2023, which unlocked the USD600m second disbursement under the IMF programme.
The Ministry of Finance is confident that a deal with bondholders can be reached by the end of Q1 2024.
According to Standard Bank, it sees Ghana finalizing an external debt restructuring deal in the first half of 2024.
The formation of the G20 common market framework in 2020 following the implosion of debt sustainability of economies that were already on the cusp prior to the pandemic, was expected to expedite debt restructuring resolution and kickstart the journey to restore debt towards more sustainable positions.
Zambia, Ethiopia and Chad were the first economies initially to apply for debt restructuring under this framework, with Ghana following suit in 2022.
