Ghana official creditors to meet Monday, mull debt restructuring terms -sources

Vontobel Holding AG

04/01/2024 14:38

(Updates with Paris Club comment in paragraph 8)
    By Rachel Savage, Maxwell Akalaare Adombila and Jorgelina do
Rosario
       JOHANNESBURG/ACCRA/LONDON, Jan 4 (Reuters) - Ghana's
official creditors are scheduled to meet on Monday to discuss
restructuring some $5.4 billion in loans to the country, three
sources told Reuters, a key step needed to secure its next
tranche of funding from the International Monetary Fund.
    The bilateral lenders, including the governments of China
and France who co-chair the Official Creditor Committee (OCC),
hold around a quarter of Ghana's $20 billion external debt
earmarked for restructuring.
    The meeting is again expected to focus on an agreement about
a "cut-off date" - the date after which new loans from bilateral
creditors will not be restructured, the sources with knowledge
of the matter said. Defining this date has emerged as a
stumbling block for Ghana in its debt rework.
    Some creditors are said to prefer Dec. 31, 2022, as a
cut-off date with Ghana having defaulted earlier that month,
according to sources. However, others pushed for March 24, 2020,
because that was when the Group of 20 introduced its debt
service suspension initiative (DSSI) to help the world's poorest
countries cope with the fallout of the COVID crisis. Ghana did
not participate in the DSSI. 
    In preparation for the Jan. 8 OCC meeting, the Paris Club of
major creditor nations, which does not count China among its
permanent members, will convene on Friday, two sources said. 
    The Paris Club this week shared a technical note with other
bilateral creditors and multilateral lenders on Ghana, one of
the sources said, adding that the group of rich nations is
proposing December 2022 as the cut-off date, one source with
direct knowledge said. 
    "Ghana is still about cut-off date, but creditors haven't
agreed yet," the source said. "If the cut-off date is agreed,
that means an agreement on debt restructuring is close."
    A spokesperson for the Paris Club declined to comment on
meetings that have not yet taken place. Ghana's finance ministry
did not immediately respond to a request for comment. 
    The West African country, which produces gold, cocoa, and
oil, needs to come to an agreement on a debt restructuring with
its official creditors to secure the IMF executive board's
approval for the next $600 million payout from a $3 billion
rescue loan. 
    This is because the Washington-based lender needs financing
assurances that debt relief is being provided by bilateral
creditors in accordance with the IMF programme. 
    Ghana, where a deep economic crisis has seen inflation and
the government's debt servicing costs spiral, asked a year ago
for a bilateral debt restructuring under the Common Framework, a
process set up during the COVID-19 pandemic by the G20 leading
economies.
    It is also in talks with overseas bondholders to restructure
its more than $13 billion in international debt. Holders of the
bonds include major global asset managers such as BlackRock,
PIMCO, Vontobel, AllianceBernstein and Neuberger Berman.

 (Reporting by Rachel Savage, Maxwell Akalaare Adombila and
Jorgelina do Rosario; Writing by Karin Strohecker; Editing by
Dhara Ranasinghe, Hugh Lawson and Alison Williams)
 ((karin.strohecker@thomsonreuters.com; +442075427262; Reuters
Messaging: karin.strohecker.reuters.com@reuters.net))