Ghana’s stalled projects expected to resume after debt restructuring

Ghana's president, Nana Akufo-Addo, recently announced the successful completion of negotiations for the restructuring of domestic, external bilateral, and commercial bondholders debts, paving the way for much-needed financial relief to resume stalled projects. The country has managed to reach an agreement in principle with two bondholder groups to rework a significant $13 billion debt, with the bondholders agreeing to a 37% haircut. This landmark achievement is a crucial step towards revitalizing Ghana's economy and restoring its credibility in the international financial community. The debt restructuring agreement offers two options for bondholders: the disco bond and the power bond, with a cap set at $1.6 billion. Despite the haircut being slightly higher than the initially proposed 33%, bondholders will also benefit from varying interest rates, leading to an estimated $4.4 billion cash flow relief by the end of the IMF program in May 2026. This positive development is poised to inject momentum into the Ghanaian economy and potentially prompt upgrades from international rating agencies. Looking ahead, Ghana is expected to present the restructuring proposal to the remaining bondholders, with optimism that they will endorse one of the two options laid out by the country. The anticipated IMF Executive Board approval, scheduled for later this month, could unlock a disbursement of approximately $360 million and signal a return to debt sustainability for Ghana, contingent upon maintaining fiscal prudence in the future. Rhode Luemba, Head of Flow Sales, Global Market at Standard Bank Group, acknowledged the government's efforts to demonstrate responsibility in the wake of the debt default, emphasizing the significant savings of nearly $8 billion achieved through the restructuring. This financial breakthrough, coupled with additional negotiation successes yielding $2 billion in savings, sets Ghana on a path towards sustainable development and economic progress. In addition to Ghana's success story, Moody's has upheld a positive outlook for the Nigerian economy, citing improvements in external balance, the potential for economic growth, the clearing of the FX backlog, and the Central Bank of Nigeria's prudent monetary stance. While inflation remains a lingering concern, Moody's endorsement reflects the progress made in addressing fiscal and external challenges. Similarly, Fitch's affirmation of Angola's long-term foreign currency issue default rating at B minus with a stable outlook underscores the country's efforts to manage revenue challenges amidst commodity dependence and inflationary pressures. The collective strides taken by Ghana, Nigeria, and Angola in navigating economic headwinds and implementing structural reforms underscore a shared commitment to financial stability and growth. As these nations continue to chart a course towards sustainable development, the successful debt restructuring in Ghana serves as a beacon of hope for overcoming fiscal hurdles and reigniting economic prosperity in the region.