This restructuring initiative is crucial for Ghana to meet the eligibility criteria and qualify for the forthcoming tranche of $600 million from the International Monetary Fund (IMF).
Gov’t to convert GHS 8.1bn Cocoa Bills with 32% yield into new bonds with 12% yield.
Sources within the Finance Ministry have revealed that Ghana is poised to convert cocoa bills worth GHC 8.1 billion into a new bond carrying a yield of 12%. This move marks a significant departure from the 32.22% yield witnessed on the last issuance of cocoa bills in February.
The conversion of cocoa bills into the new bond forms a key component of the government’s multifaceted approach to securing new terms for its outstanding domestic debt, which amounts to GHS 123 billion. This restructuring initiative is crucial for Ghana to meet the eligibility criteria and qualify for the forthcoming tranche of $600 million from the International Monetary Fund (IMF).
The country’s debt composition encompasses diverse financial instruments, including domestic dollar bonds, cocoa bills, pension funds, and amounts owed to the central bank. As part of the broader debt restructuring strategy, the government has also reached an agreement with domestic banks to convert GHC 6.9 billion worth of domestic US dollar bonds into two term loans, featuring substantially lower interest rates.
These proactive steps underscore the government’s determination to address its debt burden and enhance its financial outlook. By restructuring both cocoa bills and domestic US dollar bonds, Ghana aims to establish a more sustainable and manageable debt structure, aligning itself with IMF requirements and fostering economic stability.
The successful implementation of these debt restructuring measures will play a pivotal role in restoring Ghana’s financial health and positioning the country for long-term growth. As Ghana works towards securing more favorable terms and meeting the IMF tranche conditions, careful negotiations and prudent fiscal management will be paramount to ensure a sustainable and prosperous future.