Ghana enters agreement with creditors to suspend debt payment until 2026

Ghana has won a moratorium with official creditors on debt payments through May 2026, and intends to negotiate a deal with Eurobond investors to restructure $13 billion debt by the end of March.

A loan moratorium is a legally authorised period that delays the payment of money due on account of specific loan instalments.

Ken Ofori-Atta, Ghana’s finance minister, spoke to Bloomberg on Wednesday on the sidelines of the World Economic Forum (WEF) in Davos.

He said the payments owed on $5.4 billion of bilateral obligations would be repaid in 16 and 17 years’ time respectively, under the terms of the agreement struck in principle last week.

Ofori-Atta said the deal with official creditors also “builds momentum and confidence” to revamp the Eurobond debt.

“There’s a sense globally that Ghana has done its part and therefore talking to the Eurobond investors, there’s a sense of urgency,” he said.

The finance minister said Ghana’s pact with official creditors, announced on January 12, stipulates that debt payments from 2023 would be repaid in 2039 and 2040, while debt service due in 2024 will be settled in 2040 and 2041.

In December 2022, Ghana halted payments on most of its external debt, including a $13 billion Eurobonds.

In October 2023, the country proposed as much as a 40 percent haircut for dollar bond investors and the issue of new instruments that would have up to 20-year maturities and a 5 percent coupon.

However, Ofori-Atta said the terms will now be influenced by the January 12 official creditors agreement.

Meanwhile, he said Ghana’s partners decided to change the cut-off date for loans that should be part of the restructuring from March 2020 to December 2022, providing the country additional time to engage with all bilateral lenders.

The minister said they also agreed to exempt $2.8 billion of bilateral obligations from debt-service payments between 2023 and 2026.

“China had its issues, the bilaterals also all had issues,” Ofori-Atta said.

“At the end of the day all the parties, whatever it is they were looking for, have been fulfilled.”

Ofori-Atta said the agreement enables the International Monetary Fund (IMF) board to disburse $600 million to Ghana under its $3 billion IMF program, unlocking $550 million from the World Bank.