The government of Ghana was expected to pay outstanding Eurobond loans worth at least $7.85 billion in the next 10 years, without a debt restructuring.

According to data contained in the 2021 debt report released by the Finance Ministry, nine outstanding Eurobonds maturing in the next the 10 years could cost government at least $7.85bn, with about $3.7 billion (41.13%) of the total amount expected to be serviced in the next five years.

Less than two years after Ghana became a trailblazer as the first country in Africa to issue a zero-coupon tranche Eurobond, the country has announced its intention to suspend payments on most of its external debts (including Eurobonds) in order to pave the way for a $3 billion IMF bailout package.

According to 2021 debt report, "total external debt service (principal repayments, interest payments and charges) on Government debt for 2021 amounted to US$2,209.4 million [$2.2bn], compared to
US$2,611.2 million [$2.6] in 2020. This represented a decrease of US$401.8 million (15.4 percent)."

Two weeks ago, the government officially announced a debt operation exercise called “Domestic Debt Exchange” which outlined the nature of debt restructuring for domestic creditors. This is to pave the way for the much anticipated $3 billion IMF bailout package.

The Minister in charge of Finance indicated that “Under the programme, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037. The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity. Coupon payments will be semi-annual.”

He however, emphasised that “the Government of Ghana has been working hard to minimise the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups.” As a result, “Treasury Bills are completely exempted and all holders will be paid the full value of their investments on maturity.” The Finance Minister reiterated President Akufo-Addo’s earlier position that “there will be NO haircut” on the principal of bonds and that individual holder of bonds will not be affected.

As of September 2022, government of Ghana’s sovereign debt portfolio stood at GH₵‎467.4 billion ($48.9 billion) with a domestic component worth GH₵195.7 billion ($20.5 billion) and an external slice of GH₵ 271.7 billion ($28.4 billion).

Although the Finance Minister, Ken Ofori-Atta noted in his announcement of the Debt Exchange Programme that “external debt restructuring parameters will be presented in due course.”, his Deputy, John Kumah revealed on 24^th November 2022 that “domestic bondholders will receive zero interest for 2023, 5% interest in 2024 and 10% interest in 2025; and also, domestic bondholders can only expect to start receiving their full interest in 2026”. Meanwhile, “for foreign bondholders, government is proposing a 30% haircut on both principal and interests.” Mr. Kumah stressed.

7 downgrades from 3 credit ratings agencies in 2022

About three weeks ago, Moody’s downgrade of Ghana’s long-term sovereign bonds to further junk territories brought the total number of Ghana's downgrades and revisions to 7 in less than 11 months this year.

At the beginning of the year, Fitch was the first to drop Ghana’s sovereign bonds rating from ‘B’ (negative outlook) to ‘B-’ (negative). In less than 3 weeks, Moody’s also followed with their first downgrade. S&P was next to follow through in August. Ghana has since then experienced different downgrades and reviews