Ghana's Debt Restructuring: Relief for government, hardship for investors - Prof. Bokpin

An Economist at the University of Ghana, Godfred Bokpin has provided an in-depth analysis of Ghana’s debt restructuring, revealing the significant losses incurred by investors.

In an interview on Morning Starr with Naa Dedei Tettey, he explained that “the external debt at the end of December 2022 worked up to about $30.5 billion,” with Ghana’s obligations to multilateral institutions such as the IMF, World Bank, and African Development Bank alone amounting to $8.8 billion.

Despite their substantial exposure, these institutions opted out of the restructuring process, declaring themselves “untouchable.”

The expert further elaborated on the restructuring of external bilateral debt, noting that “we had about $5.1 billion of external bilateral debt to be restructured,” involving countries like China and India. Through the G20 common framework, which succeeded the Debt Service Suspension Initiative (DSSI), Ghana managed to obtain “a release of $2.8 billion” from this debt. However, he cautioned that “majority of that is just moratorium,” questioning the long-term viability of such measures.

He then shifted focus to the euro bond market, where Ghana’s total exposure amounted to $14.6 billion. After adjustments, the restructuring covered $13.1 billion, providing “relief in present value terms of about $4.4 billion. While this brought some short-term relief to the government, it came at a high price for European investors who faced severe haircuts on their investments.

Despite the temporary reprieve, the expert warned that the relief would not last, stating, “This is not a breathing space for long.”He anticipated that by 2026, Ghana would need to return to the negotiating table, cautioning, “We will come back to the table not too long from now,” indicating that the country’s financial challenges were far from over.