Ghana’s Official Creditor Committee Approves Eurobond Debt Restructuring Deal

Ghana’s bilateral lenders, through the Official Creditor Committee (OCC), have approved the government’s deal with Eurobond holders on the proposed terms to restructure approximately $13.1 billion in debt. The Ministry of Finance announced in a statement that it has received formal confirmation from the OCC that the Agreement in Principle reached with Eurobond representatives adheres to the Comparability of Treatment principle.

This approval follows the government's earlier announcement this month of reaching an Agreement in Principle with Eurobond holders to restructure the $13.1 billion debt. The move aligns with the International Monetary Fund (IMF) programme aimed at enabling the country to achieve sustainable debt levels by 2028. The IMF board, after its second programme review, confirmed that the debt treatment agreement is consistent with the programme parameters, provided the necessary financing assurances are met.

Background

Under the OCC Framework for debt restructuring, the principle of Comparable Treatment requires that any terms the Government of Ghana agrees with bilateral creditors must also be extended to other creditors. Consequently, the Ministry of Finance had to submit the terms agreed upon with bilateral creditors to the official creditors for their acceptance.

What’s Next for the Government?

With the OCC’s approval, the Ministry of Finance is now positioned to launch the Debt Exchange Programme for Eurobond holders to restructure the debt. However, the bondholders must first fully accept the offer, despite the Agreement in Principle reached.

Minister of Finance Dr. Mohammed Amin Adam, in a recent press conference, revealed that the government plans to launch the offer for Eurobond holders in July 2024, with the process expected to conclude in September. Market analysts have linked the current challenges with the Ghanaian Cedi to delays in finalizing the debt restructuring deal with Eurobond holders.

The government's next steps will be crucial in stabilizing the economy and ensuring long-term financial sustainability.