Strong GDP growth puts Ghana’s $13bn Eurobond revamp back on track
TLDR
- Ghana's $13 billion Eurobond debt restructuring plan, previously rejected by the IMF, is now progressing due to stronger-than-expected economic growth in the country.
- IMF's initial rejection was based on debt sustainability concerns, but Ghana's robust 2023 economic growth surpassing forecasts is paving the way for a positive reassessment.
- Latest data reveals Ghana's economy expanded by 2.9% in the fourth quarter of last year, outperforming IMF's 1.5% projection, potentially signaling approval for the Eurobond restructuring plan to proceed.
Ghana’s plan to restructure $13 billion of Eurobond debt, initially rejected by the International Monetary Fund (IMF) last month, is now back on track due to stronger-than-expected economic growth in the country.
In April, the IMF informed Ghana that its debt restructuring proposal did not meet a crucial debt sustainability requirement. However, Ghana’s economic growth in 2023 was nearly double the forecasted level by the IMF, prompting a reevaluation of the debt plan.
Fourth quarter data showed Ghana’s economy grew 2.9% last year, beating the IMF’s projection of 1.5% that was used in the existing debt assessment. The IMF's forthcoming debt assessment is likely to indicate that Ghana can meet its debt target, allowing the Eurobond restructuring plan to move forward, Bloomberg reports.
Key Takeaways
Ghana's plan to restructure $13 billion in Eurobond debt is back on track due to stronger-than-expected economic growth. This effort is part of a broader restructuring of nearly all of Ghana’s $42.2 billion debt after it halted external payments in late 2022. The IMF initially rejected the plan in April, but Ghana’s improved economic performance prompted a reassessment and the fund has provided $3 billion in emergency funding, with $360 million pending Executive Board approval. This follows Ghana's successful domestic debt rework last year and a preliminary agreement with bilateral lenders in January. The IMF's new assessment is expected to confirm that Ghana can meet its debt targets, allowing the Eurobond restructuring to proceed.
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