Ghana

Ghana plans to convert an estimated 40 billion cedis ($3.3 billion) of loans owed to its central bank into bonds, making it the single biggest holder of domestic government securities and exposing it to an ongoing debt restructuring, Bloomberg News reported. The bonds, due to be issued by the finance ministry, will also cover interest owed to the Bank of Ghana, said the people, who asked not to be named because they’re not authorized to speak publicly on the matter.

Even as Ghana takes its third big step to extricate itself from debt distress, bond investors face a new complication: political uncertainty, according to a Bloomberg News commentary. The West African nation’s government reiterated it has sought relief from bilateral lenders including the Paris Club and China under the Group-of-20 Common Framework. The move follows an offer to local-currency bondholders for a debt swap with coupon reductions and a unilateral move to suspend payments on external debt.

Ghana was cut to default by S&P Global Ratings after the government suspended debt payments, a move that complicates the planned debt restructuring meant to unlock a bailout by the International Monetary Fund, Bloomberg News reported. The West African nation, which has $13 billion of foreign bonds, was downgraded to selective default from CC due to the moratorium on debt payments, the credit assessor said in a Tuesday statement.

Ghana on Monday suspended payments on most of its external debt, effectively defaulting as the country struggles to plug its cavernous balance of payments deficit, Reuters reported. Its finance ministry said it will not service debts including its Eurobonds, commercial loans and most bilateral loans, calling the decision an "interim emergency measure", while some bondholders criticised a lack of clarity in the decision. The government "stands ready to engage in discussions with all of its external creditors to make Ghana's debt sustainable", the finance ministry said.

Ghana will launch a domestic debt exchange on Monday, its Finance Minister Ken Ofori-Atta said, expressing confidence that the move would help restore macroeconomic stability and end the West African country's worst economic crisis in a generation, Reuters reported. Ofori-Atta said in a video address on Sunday that Ghana's government had finished its debt sustainability analysis, but he did not provide any information on plans for foreign debt that are anxiously awaited by international creditors.

Ghana will ask holders of its international bonds to accept losses of as much as 30% on the principal and forgo some interest payments as it hammers out a debt-sustainability plan to qualify for a loan from the International Monetary Fund, Bloomberg News reported. The West African country will also ask holders of domestic bonds to forfeit some interest payments, Deputy Minister of Finance John Kumah told Accra-based Joy FM radio. He confirmed the planned restructuring in an interview with Bloomberg. “These are proposals,” Kumah said by phone on Thursday.

Ghana's finance ministry has formed a five-member committee with the Bank of Ghana to lead discussions with the financial services industry concerning an International Monetary Fund (IMF) programme, it said in a statement on Tuesday, Reuters reported. The goal of the committee is to "ensure orderliness and confidence in the government's ongoing negotiations with the IMF," the statement said. A similar engagement will be undertaken with external bondholders, it added.

The International Monetary Fund confirmed on Sunday that a staff team will visit Ghana this week to continue discussions with the authorities on policies and reforms that could be supported by an IMF lending arrangement, Reuters reported. Ghana turned to the IMF for help in July as its balance-of-payments deteriorated and hundreds took to the streets to protest against economic hardship. An IMF staff team briefly visited the country two weeks later. Reuters' reported last week that an IMF team would visit Ghana this week.

Ghana's central bank on Wednesday delivered its biggest rate hike ever, a 300 basis point increase to 22%, at an emergency meeting to address the economy's rapid deterioration amid crippling inflation, Reuters reported. The hike comes just three weeks after it kept its monetary policy rate unchanged at 19% and said it was pausing to observe the impact of a series of record-breaking hikes. It had been due to meet again in late September, but on Monday it said an emergency meeting was needed.