Source: newsthemegh.com
As the West African nation struggles to emerge from its worst economic crisis in a decade, two sources with firsthand knowledge of the situation say Ghana has made a debt restructuring proposal to its official creditors.
According to one of the sources, the “working proposal” is an essential first step for the producer of cocoa, gold, and oil to interact with the formal creditor committee following its formation in May. It is not legally binding.
It indicates the start of a more extensive negotiation process in which several ideas will probably be exchanged.
According to a government official, Ghana plans to complete restructuring its internal debt before beginning negotiations with its official, bilateral creditors, and foreign bondholders.
The proposal’s specifics and the date it was sent were not confirmed by the sources. The finance ministry of Ghana’s spokesman declined to react right away.
To successfully implement a $3 billion loan agreement from the International Monetary Fund (IMF), Ghana plans to save $10.5 billion in interest payments on its external debt over the next three years.
According to a government presentation to investors, as of the end of 2022, its debts to nations like China and members of the Paris Club of creditor nations totaled $5.4 billion of the $20 billion external debt that was due for restructuring. About $30 billion worth of external debt was present overall.
The majority of the remaining domestic debt, which includes agreements with pension funds, labor unions, and independent power producers, is being sought relief on by Ghana, which concluded a domestic debt exchange with 65% of local bondholders in February.
For its external debt restructuring, it is using the Common Framework approach, which was established by the G20 in 2020 to include China and other emerging creditor countries in cooperative sovereign debt restructuring negotiations.