Ministry of Finance affirms fair debt talks under G20 framework.
Adnan Adams Mohammed
The Government of Ghana has assured its outstanding external creditors that it aims to reach an agreement that balances the interests of all stakeholders in its ongoing debt restructuring negotiations
In a press statement issued by the Ministry of Finance, the government acknowledged progress in the negotiations, reaffirming its dedication to fair and transparent discussions in line with the G20 Common Framework.
The Ministry further confirmed that the government has strictly followed the terms of its Memorandum of Understanding (MoU) with official creditors, and has maintained arrears with all external creditors included in the debt restructuring scope.
“The Government remains committed to achieving a fair and mutually beneficial resolution with all creditors, and thanks its partners for their forbearance, cooperation, and support,” the statement said.
The Ghanaian government emphasized that no creditor has been given preferential treatment, in keeping with the principle of Comparability of Treatment.
“In line with Ghana’s commitments to the official creditors, under the G20 Common Framework, no creditor has been treated preferentially,” the statement noted.
“This is consistent with the principle of Comparability of Treatment.”
The G20 Common Framework, used for Ghana and Zambia’s restructuring process, brings together all official creditors (Paris Club countries plus China and others) to negotiate in a single official creditor committee (OCC), which is then sequentially followed by negotiating with bondholder groups and commercial creditors.
In January, 2024, the government announced that it has reached an agreement with some of its Official Creditors under the G20 Common Framework, on a comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative. This followed the successful completion of the Domestic Debt Exchange Programme (DDEP) in 2023, which signaled significant positive steps towards restoring Ghana’s long-term debt sustainability.
After a month of Ghana’s Eurobond debt restructuring campaign, about 98.6 percent of bondholders agreed to either a Par or Disco offer, Ministry of Finance has indicated.
These shows an impressive interest from bondholders to accept the restructuring arrangements. The overwhelming backing from bondholders highlights confidence in the country’s financial recovery efforts.
Ending the campaign on October 3, 2024 with series of solicitation meetings to conclude the process.
Eligible holders were invited to swap their old bonds for new ones under two options: Par and Disco.
“Holders of the 2013, 2014, and 2015 World Bank-Guaranteed Notes passed extraordinary resolutions with over 90 percent representation, ensuring a seamless restructuring process”, the Ministry noted last week.
“For the Aggregated CAC Notes, consents exceeded 98.7 per cent, surpassing the required thresholds for the exchange.”
The majority of bondholders, approximately 91 percent of the principal amount, opted for the Disco menu of new notes, while 7.6 percent chose the Par menu, which remained under its cap of USD1.6 billion, leaving a balance of USD605 million for future allocations.
Additionally, USD126 million in consent fees will be distributed to eligible bondholders who submitted their instructions by the early consent deadline.
The issuance of the new bonds is expected around Wednesday, 9 October 2024, with full settlement following shortly thereafter.
This successful exchange is a significant milestone in Ghana’s broader debt restructuring strategy under its International Monetary Fund (IMF) programme, reinforcing the country’s commitment to achieving debt sustainability and rebuilding relationships with international capital markets.
The Government of Ghana expressed its gratitude to bondholders for their participation, emphasising that this outcome reflects a collective commitment to restoring the nation’s economic stability.
To facilitate a smooth final settlement, all existing Eurobonds, including those for which no consent or exchange instructions were provided, will be blocked from trading in preparation for the issue date.
The Ministry of Finance has touted Ghana’s economic recovery as remarkable amidst second quarter Gross Domestic Product (GDP) growth achieved.
According to Ghana Statistical Service (GSS), the debt-ridden country recorded 6.9 percent growth in economic activities within the first six months of 2024.
The unexpected growth comes at a time the country faces weakened forex rate, debt restructuring, high cost of borrowing and doing business and declining foreign direct investments. To this, the Ministry terms Ghana’s economic trajectory as ‘fast recovering’.
“The economy’s robust recovery is in response to the macroeconomic stability and growth interventions that the government is pursuing under our IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG)”, a statement released by the Finance ministry posited. “The 6.9% growth recorded in Q2 2024 is the highest quarterly GDP growth recorded in the past 5 years.”
It said overall real GDP growth for the first half of 2024 “rebounded strongly, with year-on-year GDP growth averaging 5.8% for the period, significantly higher than the 2.9% recorded in the same period in 2023.”
According to the ministry, the 2024 first half-year growth of 5.8% is supported by a 4.8% expansion in the economy in Q1 2024 and 6.9% in Q2 2024.
“Non-oil GDP growth for the first half of 2024 was equally robust with a growth rate of 5.6%, significantly higher than the 3.8% recorded in the first half year of 2023. The first half-year economic expansion is supported by Q1 growth of 4.3% and Q2 growth of 7.0%.
“It is instructive to note that the 5.8% overall growth for the first half of 2024 is significantly higher than the 1.5% growth target for 2024 which was later revised to 3.1% during the 2024 Mid-Year Review of Fiscal Policy presented in Parliament in July 2024.”
The ministry further related that, “Given that Ghana completed its domestic debt restructuring programme in 2023 and is currently in the process of completing its external debt restructuring programme, the growth performance for the first half-year of 2024 is much higher than the growth recorded by countries which have undergone similar debt restructuring programmes in the past.”
A case in point is Jamaica, the statement cited, “Which recorded average real GDP growth of 1%-2% for about a decade post its debt restructuring.”
“All three sectors of the economy, namely agriculture, industry, and services contributed to the robust growth recorded in the first half of 2024: The Industry sector recorded an average growth of 8.0% in H1 2024 up from the contraction of 2.0% recorded in H1 of 2023. The 8% growth is supported by growth of 6.8% in Q1 and 9.3% in Q2.”
It noted that the sector’s “strong” recovery in the first half of 2024 was driven mainly by growth recorded in the following sub-sectors: 13.9% growth in Mining and Quarrying supported by 12.9% growth in Q1 and 14.8% in Q2; 9.9% growth in Oil & Gas supported by 13.8% growth in Q1 and 5.8% in Q2; 8.3% growth in Construction supported by 8.2% growth in Q1 and 8.4% in Q2; and 2.8% growth in Manufacturing supported by 2.0% growth in Q1 and 3.9% in Q2.
Also, it noted that the agriculture sector expanded by 5.0% in the first half of 2024 supported by Q1 growth of 4.7% and Q2 growth of 5.4%.
“The agricultural sub-sectors that contributed the most to growth in the sector for the first half-year of 2024 include 5.6% growth in the Crops sub-sector underpinned by 5.0% growth in Q1 and 6.4% in Q2; 4.7% growth in the Fishing subsector supported by 4.7% growth in Q1 and 4.7% in Q2; and 4.7% growth in the Livestock subsector supported by 4.6% growth in Q1 and 4.7% in Q2.”
The Services sector, the ministry added, “Expanded by 4.4% in H1 2024 supported by growth of 3.2% in Q1 and 5.8% in Q2.”
It lists the Services sub-sectors that contributed the most to the H1 2024 growth as “15.3% growth in Information and Communication underpinned by 17.9% growth in Q1 and 12.8% in Q2; 7.4% growth in the Accommodation & Food Service Activities subsector supported by 7.9% growth in Q1 and 4.9% in Q2; 6.5% growth in the Financial & Insurance Activities subsector supported by 5.5% growth in Q1 and 7.6% in Q2; 3.4% growth in the Transport & Storage sub-sector supported by 3.3% in Q1 and 3.6% in Q2; 2.9% growth in the Real Estate sub-sector supported by 3.9% growth in Q1 and 2.3% in Q2; 2.5% growth in the Professional, Admin & Support Service activities sub-sector underpinned by 4.1% growth in Q1 and 1.9% in Q2; and 2.8% growth in the Trade, Repair of Vehicles, Household Goods sub-sector underpinned by 2.5% in Q1 and 3.2% in Q2.”
The ministry noted that the government “will continue to prioritise the restoration and sustenance of macroeconomic stability, which is necessary for the promotion of our inclusive growth agenda.”
It said that it is expected that the implementation of the government’s growth strategy including the Planting for Food and Jobs Phase 2 Programme, the SME Growth and Opportunity Programme, the 1 District 1 Factory Programme, the Economic Enclave Programme under the Ghana CARES Programme, “will further consolidate the gains we are making in economic recovery to improve the living conditions of the Ghanaian people.”
