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  • Ghana suspends payments on Eurobonds, commercial loans
  • Announcement one week after IMF staff level agreement
  • Eurobonds fell to 3 cents on the dollar

ACCRA, Dec 19 (Reuters) – Ghana suspended payments on most of its foreign debt on Monday, effectively defaulting, as the country struggles to close its cavernous balance of payments deficit.

His finance ministry said it would default on debt, including its eurobonds, trade loans and most bilateral loans, calling the decision an “interim emergency measure”, while some bondholders criticized the decision’s lack of clarity.

The government is “ready to engage in discussions with all its external creditors to make Ghana’s debt sustainable,” the finance ministry said.

The suspension of debt payments reflects the poor state of the economy, which forced the government to reach a $3 billion staff-level agreement with the International Monetary Fund (IMF) last week.

Ghana had already announced a domestic debt swap program and said external restructuring was being negotiated with creditors. The IMF has said comprehensive debt restructuring is a condition of its support.

The country has been struggling to refinance its debt since the start of the year after being downgraded by several credit rating agencies on fears it would not be able to issue new Eurobonds.

This has pushed Ghana’s debt into more alarming territory. Its public debt stood at 467.4 billion Ghana cedis ($55 billion, according to Refinitiv Eikon) in September, of which 42% is domestic.

Ghana’s external debt by owner type, 2022 quarter, billion dollars

It ran a balance of payments deficit of more than $3.4 billion in September, up from a surplus of $1.6 billion in the same period last year.

While between 70% and 100% of government revenues currently go to debt service, the country’s inflation reached 50% in November.

Ghana is experiencing what some say is the worst economic crisis in a generation. More than 1,000 protesters marched in the capital Accra last month, calling for the president’s resignation and condemning IMF deals as fuel and food costs soared.

Its gross international reserves stood at around $6.6 billion at the end of September, equal to covering less than three months of imports. That’s down from around $9.7 billion at the end of last year.

The government said the suspension would not include debt related to multilateral debt, new debt taken out after December 19 or certain short-term commercial facilities.


Ghana’s international bondholders confirmed in an emailed statement late on Monday the formal launch of a creditors’ committee aimed at facilitating an “orderly and comprehensive resolution” of the country’s debt challenges.

Any good-faith negotiations, the committee of creditors said, should avoid unilateral action and require the timely exchange of detailed economic and financial information between international bondholders, the government and the IMF.

The steering committee was made up of Abrdn, Amundi, BlackRock, Greylock and Ninety One, the group said in a statement.

Kathryn Exum, who heads Gramercy’s sovereign research division, was optimistic about the debt restructuring, saying it should be easier for creditors than other recent emerging market restructurings.

“It’s simpler than the likes of Sri Lanka and Zambia in the sense that China doesn’t have a lot of debt,” Exum said Friday in comments that anticipated the external restructuring.

One bondholder, who asked not to be named, said the lack of details in the announcement could be a cause for concern for investors.

Ghana’s external bonds, which are trading at a deep alarm level of 29-41 cents to the dollar, fell as the 2034 bond lost more than 3 cents, Tradeweb data showed.

Reuters Graphics Reuters Graphics

However, some investors said that the suspension of foreign debt payments was expected.

“It’s consistent with Ghana negotiating a restructuring with various debt holders so it doesn’t come out of the blue,” said Rob Drikkoningen, co-head of emerging market debt at Neuberger Berman, which holds some of Ghana’s eurobonds.

Ghana paid the December 16 coupon with a 2049 Eurobond, according to a person familiar with the matter.

It was not immediately clear whether the debt service freeze would include a $1 billion 2030 bond that has a $400 million World Bank guarantee.

“We will not comment on the specifics of any specific bond or debt at this time, but … we are fully engaging all stakeholders,” a finance ministry spokeswoman told Reuters.

($1 = 8.5000 Ghana cedis)

Reporting by Christian Acorley and Cooper Inven; Additional reporting by Rachel Savage, Mark Jones and Georgina do Rosario; Written by Rachel Savage and Cooper Inven; Editing by Karin Strohecker, Ed Osmond, Arun Koyur and Aurora Ellis

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