Ghana will ask holders of its international bonds to accept losses of as much as 30 per cent on the principal and forgo some interest payments as it hammers out a debt-sustainability plan to qualify for a loan from the International Monetary Fund (IMF).
The West African country will also ask holders of domestic bonds to forfeit some interest payments, Deputy Minister of Finance John Kumah told Accra-based Joy Fm radio. He confirmed the planned restructuring in an interview with Bloomberg.
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“These are proposals,” Kumah said by phone on Thursday. “We will soon start negotiations with both local and foreign bondholders.”
Ghana is negotiating a $3 billion program with the IMF after being shut out of international debt markets amid a selloff of its dollar debt that lifted yields to distressed levels. The cedi is the world’s worst-performing currency against the dollar this year, lifting the cost of servicing the debt.
In addition to principal cuts, the government is looking to suspend interest payments on foreign bonds for three years, Kuma said. Domestic bond investors would be asked to exchange their existing securities for new securities that may offer a zero coupon in the first year, 5 per cent in the second and 10 per cent in the third year, Kumah said in the broadcast.
The reorganisation is intended to help Ghana meet debt sustainability requirements to qualify for the IMF bailout it has been negotiating since September, and possibly reach a staff-level agreement with the Washington-based lender by year-end.
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