Rising Borrowing Costs Spur Ghana to Cut Loans Plan, Tap IMF

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Ghana slashed its plan to borrow as much as $750 million from international banks because of surging borrowing costs, according to a finance ministry official with knowledge of the matter, and will also tap the International Monetary Fund to bolster its finances, Bloomberg News reported. The West African nation will borrow $250 million from banks at an interest rate of about 8.4% to fund budget needs such as roads, railways, energy and health. The five-year syndicated loan facility brokered by lead arrangers Standard Bank Group Ltd., Standard Chartered Plc and FirstRand Ltd.’s Rand Merchant Bank Ltd. will be repaid at the Federal Reserve’s secured overnight financing rate plus 6.85% per annum, according to a copy of the terms sent to parliament by the finance ministry and seen by Bloomberg. The SOFR stood at 1.5% as of the close on June 30. After failing to find cheaper sources of funding, President Nana Akufo-Addo’s government on Friday said Africa’s second-largest gold and cocoa producer will seek a bailout from the IMF. The nation’s dollar reserves dropped to $8.3 billion at the end of April from $9.7 billion at the end of last year, according to the central bank. The country’s public debt increased to 78% of gross domestic product at the end of March from 76.6% in December. Read more.