The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, is advising Ghana to reach a better deal with its Eurobond holders, saying, failure to do so risks prolonging Ghana’s debt situation.

According to her, the deal should be in the best interest of the country.

The IMF boss disclosed this when she paid a courtesy call to President Akufo Addo.

She pointed out that Ghana must make sure that the country is not shortchanged in all the negotiations. 

“We need to complete negotiations with private creditors and Eurobond bond creditors but completely defending the interest of the country. I heard a bit of discussion, but the sooner we do it the better for the country. The sooner we do a great deal the better for the country”, she stressed.

“To do a deal that would reverse progress is not going to be good for the country. You cannot allow the Eurobond creditors to twist your arm because you have done a very painful domestic debt restructuring that has hurt people here. You have agreed to debt principle with official creditors of Ghana under certain conditions”, she added.

Continuing, Madam Georgieva warned of a fair deal with the Eurobond holders to avoid the Zambia situation where the official creditors disagreed with the restructuring terms with the commercial creditors.

“The deal with the Eurobonds has to be a fair deal otherwise we risk seeing what happened in Zambia. In October [2023], I thought the deal was done then the private sector twisted Zambia’s arm and then tried to give them a better deal than the official creditors.”

“So that is my reflection, a critical time close to the top. But we still need to do a bit of climbing”, she concluded.

Ghana proposes 30-40% haircut for Eurobond holders

Ghana proposed 30-40% haircut for Eurobond holders as part of the restructuring of the external debt.

Former Finance Minister, Ken Ofori-Atta said coupons may also not exceed 5% with final maturities of not more than 20 years.

“So in our indicative scenario, the restructuring terms for bondholders involve maybe a nominal haircut between 30 and 40%, looking at maybe coupons of not more than 5% and final maturities of not more than 20 years are sort of the contours of what we are discussing and analyzing”.