As part of continuing the previous government’s efforts to minimize the country’s debt overhang through debt structuring, the Government of the Republic of Ghana is in private talks with the group of lenders that owns nearly all of its “Saderea” bonds to find a common ground in treating the bonds.
This forms part of the major steps of the current government to stabilize the nation’s finances.
A statement released by the Ministry of Finance announces that after three weeks of intensive discussions, both sides have developed a joint plan to restructure approximately $117.7 million in debt, signaling a potential end to a complex financial standoff.
A Shared Path Forward
The Ministry of Finance says as part of negotiations, it engaged an “Ad Hoc Committee” representing investors who control 97.5% of the outstanding Saderea bonds. Together, they have created what they call a “Joint Working Scenario, which is a proposed roadmap for how this debt will be repaid in a way that Ghana can actually afford.
The government is working with top-tier global financial and legal experts, including Lazard Frères and Hogan Lovells, to ensure the deal is solid and fair.
What the Proposed New Deal Looks Like
The proposed plan isn’t just about delaying payments; it’s a complete makeover of the debt’s terms. Under the current proposal, for every $1,000 of old debt, lenders would receive two new types of “IOUs” (notes):
• $986 in “Step-Up” Notes: These would be paid back by 2035, with interest starting in July 2026.
• $330 in Low-Interest Notes: These carry a modest 1.5% interest rate and are due in 2037.
Why This Matters for Ghana
This proposed arrangement, if mutually approved by the parties, is a significant win for the country’s economic recovery for several reasons:
1. Immediate Breathing Room: The plan is designed to significantly reduce debt service payments between now and 2026, allowing the government to keep more cash for essential services.
2. Long-Term Relief: The proposal could provide debt relief ranging from 20% to over 46%, effectively shrinking the total burden Ghana owes to these specific lenders.
3. Fairness: International observers (the OCC) are currently reviewing the plan to make sure it is fair and consistent with how other creditors are being treated.
The Road Ahead
While this is a major milestone, the Ministry of Finance was careful to note that the deal is not yet final. Both sides still need to iron out the fine print and ensure that 100% of the bondholders agree to the terms.
However, the government expressed “gratitude” for the constructive spirit of the talks, suggesting a high level of optimism that a formal agreement is within reach.
