Ghana suspends payments on selected external debts, including Eurobonds

The government has announced that it is suspend­ing debt service payments on certain categories of external debts, including Eu­robonds, commercial loans and most bilateral debts.

According to the government, this is aimed at bringing the country’s unsustainable debt level under control – a statement from the Ministry of Finance said.

A statement issued by the Ministry of Finance in Accra yesterday noted that debt pay­ment suspension “is an interim emergency measure pending fu­ture agreements with all relevant creditors”.

“Ghana is today faced with major economic and financial crisis, and its attendant social challenges. In 2020 and 2021, the covid-19 pandemic negatively impacted our fiscal and economic situation. Global risk aversion triggered large capital outflows, a loss of external market access and rising domestic borrowing costs,” the statement said.

The statement mentioned, “This year, 2022, the global economic shock induced by the Russian invasion of Ukraine has further affected our economy just when it was beginning to recover from the pandemic. The combi­nation of adverse external shocks has exposed Ghana to a surge in inflation, a large exchange rate depreciation and stress on the financing of the budget. These factors taken together have put the sustainability of our debt at risk”.

To address these mounting challenges, we launched on Mon­day, December 5, an invitation to exchange our domestic debt.

This domestic debt operation, the statement said, was part of a more comprehensive agenda to restore public debt sustainability.

“Given the magnitude of the economic and social crisis that Ghana is confronted with, this domestic debt operation will not be enough to close the large financing gaps that Ghana faces over the coming years. The Government’s Debt Sustainability Analysis (DSA) has demonstrated that our public debt, both exter­nal and domestic, is unsustain­able,” the statement said.

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