Economic Crisis: Ghana Halts Payments on External Debt
Nana Akufo-Addo, Ghana President

Economic Crisis: Ghana Halts Payments on External Debt

Amidst tough economic conditions, Ghana’s Ministry of Finance said on Monday that the government will be suspending payments on some of its external debts, meaning that Accra will default on its debt obligations.

Ghana said in a press release that it needed to turn off foreign debt payments in order to preserve the government’s financial resources, including the central bank’s foreign-exchange reserves.

The moratorium on debt payments will apply to the country’s Eurobonds, commercial term loans, and most of its bilateral debt, while payments will continue on multilateral debts and new debt issued after Dec. 19, the Ministry of Finance said.

Last week, the IMF and Ghana reached a preliminary agreement on a $3 billion bailout to help support the government’s finances, which have been struggling amid rising global interest rates, the strong dollar and the economic fallout from Russia’s invasion of Ukraine.

Ghana dollar bonds drop after government says will suspend debt payments.

The 2027 maturity fell the most, down as much as 2.3 cents to receive bids at 34.739 cents in the dollar according to Tradeweb data. A 2030 Eurobond with a partial World Bank guarantee suffered the smallest decline, down 1.556 cents to 66.9 cents.

Total public debt stood at 467.4 billion Ghanaian cedis or $55 billion as per Refinitiv Eikon data in September, of which 42% was domestic. Moody’s Downgrades Ghana, Bonds over Liquidity, Debt Challenges

It had a balance of payments deficit of more than $3.4 billion in September, down from a surplus of $1.6 billion at the same time last year. While 70% to 100% of the government revenue currently goes toward servicing the debt, the country’s inflation has shot up to as much as 50% in November.

Its gross international reserves stood at around $6.6 billion at the end of September, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year.

The government said the suspension will not include the payments towards multilateral debt, new debts taken after Dec. 19 or debts related to certain short-term trade facilities. # Economic Crisis: Ghana Halts Payments on External Debt