How soon can Ghana seal debt deal with creditors?

Ghana is currently facing a critical juncture in its economic trajectory as it navigates negotiations with bondholders and creditors to restructure its debt. The country is hoping to reach an agreement with bondholders by the end of the year, but analysts express doubts about the feasibility of this timeline, especially considering the proposed 30-40% haircut on bonds. Kweku Arkoh-Koomson, an Economic Analyst at Data Bank, shared insights on the complexities of these negotiations in a recent interview on CNBC Africa. Arkoh-Koomson highlighted the significance of aligning debt restructuring parameters with the targets set by the International Monetary Fund (IMF) program to ensure favorable conditions for Ghana's economic recovery. While reaching an agreement with commercial bondholders by the end of the year may be challenging, he noted that negotiations with the official creditor committee could present a more achievable goal. One of the key points raised in the discussion was the possibility of incorporating value recovery instruments tied to variables like GDP growth in the debt restructuring process. Arkoh-Koomson underscored the importance of providing incentives for investors to support Ghana's economic revival, citing examples from other countries where investors accepted modified terms to align with improving macroeconomic conditions. Amidst these negotiations, Fitch's projection of Ghana's debt-to-GDP ratio reaching 99% by the end of the year has raised concerns. While acknowledging the improvements in macroeconomic indicators such as lower inflation and enhanced fiscal discipline, Arkoh-Koomson questioned the feasibility of the 99% projection. He emphasized the need for a more nuanced assessment, suggesting a more conservative estimate in the range of 80-85% if negotiations with the official creditor committee face delays. As Ghana strives to stabilize its economy and secure a sustainable debt deal, the road ahead remains uncertain. The outcome of the ongoing negotiations will not only impact the country's financial landscape but also influence investor confidence and overall economic stability. With a delicate balance to strike between meeting creditor expectations and safeguarding Ghana's long-term financial health, the government faces a challenging task in steering the nation towards economic recovery and growth.