Ghana is inviting eligible holders to exchange GH₵137.3 billion of the domestic notes and bonds, including Energy Sector Levy Act Plc and Daakye Trust Plc, for a package of New Bonds to be issued by the country.

A statement issued in Accra by the Ministry of Finance and copied to the Ghana News Agency said Ghana was facing a very challenging economic situation amid an increasingly difficult global economic environment.

It said offers may only be submitted starting from December 5, 2022, and ending at 4:00 p.m. (Greenwich Mean Time (GMT)) on December 19, 2022.

However, Ghana may at its sole discretion extend the expiration date, including for one or more series of eligible bonds.

The invitation is available only to registered holders of eligible bonds that are not individual investors or that are otherwise authorised by the Government of Ghana, in its sole discretion, to participate in the Invitation.  

It said eligible holders tendering their eligible bonds pursuant to the invitation would receive new bonds from the country on the terms and subject to the conditions described in the Exchange Memorandum.

The statement said all offers to exchange eligible bonds made by eligible holders were irrevocable.

It said such eligible bonds constituted all the eligible bonds owned by them and consent to the blocking by the Central Securities Depository of any attempt to transfer them prior to the settlement date or the termination of the Invitation by the country.

It said interest on the new bonds would not accrue until 2024, starting at 0 per cent coupon in 2023 that steps up to 5 per cent in 2024, and 10 per cent from 2025 onwards.

The first interest payment on the New Bonds will be made in 2024.

It said this was marked by the COVID-19 pandemic, the global economic shock created by Russia's invasion of Ukraine, and disruptions of global supply chains.

These adverse developments have exposed Ghana to a surge in inflation, a large exchange rate depreciation and have increased stress on the fiscal situation, it said.

The statement said to address the ongoing economic crisis, Ghana had requested financial assistance from the International Monetary Fund (IMF).

It said the government expects to reach a Staff-Level Agreement soon on an IMF programme aimed at restoring macroeconomic stability and debt sustainability while preserving financial stability, and protecting the most vulnerable.

“To this end, the government is determined to implement wide-ranging structural and fiscal reforms to kick-start growth and restore fiscal and debt sustainability,” it added.

It said the latest debt sustainability analysis had demonstrated that Ghana was faced with a significant financing gap over the coming years and that its public debt is unsustainable.

The statement said to alleviate the debt burden in the most transparent, efficient, and expedited manner, a treatment of domestic debt was necessary.

It said the invitation does not entail any reduction in the principal amount (“haircut”) of the eligible bonds.

It involved an exchange for new government of Ghana bonds with a 0 per cent coupon in 2023 that steps up to 5 per cent in 2024, and 10 per cent from 2025 onwards.

The statement said the domestic debt exchange was part of a more comprehensive agenda to restore debt and fiscal sustainability, adding that the external debt restructuring parameters would be negotiated in due course.

It said the successful completion of the domestic debt exchange was a critical component of both the debt reduction programme and the IMF programme discussions.

It will contribute to unlocking the support of the international community and will allow Ghana to achieve its debt targets.

The statement said as such, the Government of Ghana called for the full participation of all holders of eligible bonds. 

It said eligible holders, who deliver valid offers at or prior to the expiration date that were accepted by the country, would receive at the settlement date  in exchange for their eligible bonds accepted by the country, the same aggregate principal amount distributed across new bonds due in 2027, 2029, 2032, and 2037 in the following proportions: new 2027 bond of 17.0 per cent, new 2029 Bond of 17.0 per cent, new 2032 bond of 25.0 per cent and  new 2037 Bond of 41.0 per cent.

Ghana on Monday officially launch Ghana’s domestic debt exchange programme to alleviate the debt burden in a most transparent, efficient, and expedited manner.

The terms and conditions of the Invitation are described in the exchange memorandum dated December 5, 2022, and available at https://projects.morrowsodali.com/ghanadde.