The Minister of Finance, Dr. Mohammed Amin Adam, has celebrated significant milestones achieved by the Government of Ghana (GoG) as it restructures its debt obligations with domestic and external creditors. With a 95% overall participation in a GH¢203.4 billion Domestic Debt Exchange Programme (DDEP) and the successful agreement to a Memorandum of Understanding (MoU) between GoG and the Official Creditor Committee (OCC) which is co-chaired by France for the ‘Paris Club’ of bilateral creditors and China, an MoU which is being implemented by the government, Ghana is expected to delay debt payments to its external creditors until 2026 resulting in savings of $2.8 billion.
Addressing a joint press conference by the IMF and Ministry of Finance on Monday, the minister was upbeat about the progress made with Eurobond holders with an agreement of a 37% nominal principal haircut which is equivalent to a 45% market loss to the Eurobond holders.
“The debt cancellation involved a $4.7 billion and debt service savings from 2023 to 2026 is $4.4 billion. This achievement is significant given the ambitious timeline and the fact that it is the highest and the fastest agreement reached under the common framework since its inception in 2020”, he said
Furthermore, Ghana’s 2027 bonds was ranked amongst top performers in emerging markets with price due by March 2027, the minister observed. Also, the economy saw a Real Gross Domestic Product growth of 4.7% in the first quarter of 2024 as compared to the same period in 2023. Over the first quarter, Industry grew by 6.8% while agriculture grew by 4.1. The services sector however for the first time was outperformed by Industry which grew by 3.3%.
On the restructuring of over $1 billion legacy debt to the Independent Power Producers (IPPs) and ongoing renegotiation of Power Purchase Agreements (PPAs), Dr. Amin Adam noted that government has reached a commercial agreement on headline debt restructuring terms and renegotiated PPA terms with 5 out of the 7 IPPs. He said,
“As part of the implementation of the Energy Sector Recovery Programme, government has for sometime now been negotiating with the energy sector Independent Power Producers to restructure legacy debt of over one billion United States Dollars owed to the IPPs and also to restructure the Power Purchase Agreement so we could address the accumulation of arrears in the energy sector and work towards implementing critically needed reforms to make the sector more financially sustainable”
“a government negotiation team was mandated to restructure the legacy debt owed to the IPPs namely Aksa, Amandi, Cenit, Send Power, Karpowership, Early Power, and Sunon Asogli. In addition, the negotiation team was tasked to finalise any outstanding matters pertaining to the restructuring of the respective Power Purchase Agreements of the IPPs with the Electricity Company of Ghana”
“The final leg of negotiations after several months of negotiations resulted in the following; commercial agreements have been reached on headline debt restructuring terms and renegotiated Power Purchase Agreement terms with the following companies Amandi, Send Power, Early Power, Cenit and Aksa. We are finalizing documentation to sign these agreement this week and the next.”