Dr. Mohammed Amin Adam, the Minister for Finance, announced that Ghana’s debt restructuring is setting a new benchmark for creditors in the bond market.
He highlighted that Ghana’s debt exchange includes several non-financial clauses that are establishing these new market standards.
During a press conference marking the completion of the Eurobond debt restructuring process, the minister detailed key non-financial clauses incorporated into the framework. These include the Loss Reinstatement Clause, the Information Sharing Clause, and the Most Favoured Creditor Clause.
The Loss Reinstatement Clause, for example, safeguards bondholders by restoring their nominal haircut in the event of a new default within a specified timeframe.
This approach aims to promote responsible debt management and mitigate future defaults. The Information Sharing Clause ensures that debt figures are published in a timely manner, fostering transparency and accountability in debt management.
Additionally, the Most Favoured Creditor Clause ensures that Ghana cannot favor other commercial creditors over bondholders, thereby maintaining inter-creditor equity. Dr. Amin emphasized that these measures reflect Ghana’s commitment to responsible debt management and adherence to international best practices.
He further noted that the successful completion of the debt exchange positions Ghana for significant macroeconomic stability and growth. Without adjustments, Ghana’s debt-to-GDP ratio (in present value terms) was projected to reach 109% by 2028; however, fiscal measures are expected to reduce this to 81%.
The Debt Exchange and Development Plan (DDEP) aims to lower the debt ratio by 10 percentage points to 71%. Furthermore, Ghana’s agreement with the Office of the Controller and Accountant General (OCC) is projected to reduce the debt by an additional 6 percentage points.
With the conclusion of the Eurobond exchange, Dr. Amin stated that the debt-to-GDP ratio in present value terms would decrease to 55% by 2028, aligning with the IMF’s goal of a 10 percentage point reduction.
“The completion of the Eurobond debt exchange will result in an immediate reduction of our debt stock by the full extent of the US$5 billion haircut on principal, alongside savings on interest payments stemming from the restructuring,” he concluded.
