By (Reuters) – Ghana received the approval for more than 90% of bondholders to restructure and exchange $13 billion of international debt, it said on Thursday, clearing the last hurdle in its protracted debt rework.
Below is a condensed timeline of key events:
* February 2022 – Credit ratings agency Moody’s (NYSE:MCO) downgrades Ghana’s rating, saying it had a “very high credit risk”. Fitch had cut its Ghana credit rating to B- from B the previous month.
* March 2022 – Ghana’s central bank hikes interest rates by a record 250 basis points to 17% in a bid to stem rocketing inflation and a weakening currency.
* May 2022 – Ghana’s then-Finance Minister Ken Ofori-Atta says it will manage its debt without help from the International Monetary Fund (IMF).
* July 1, 2022 – Ghana’s government changes its mind and asks the IMF for a loan, amid street protests against growing economic hardship.
* July 20, 2022 – Parliament approves a $750 million loan from the African Export Import Bank as it scrambles to avoid default.
* August 2022 – The central bank delivers another record interest rate hike, as inflation continues to climb.
* Dec. 5, 2022 – The government launches a domestic debt exchange in a bid to deal with spiralling debt payments.
* Dec. 12, 2022 – Ghana and the IMF reach a “staff-level agreement” on a $3 billion rescue package, with debt restructuring one of the conditions.
* Dec. 20, 2022 – The government says it will default on most external debt.
* Dec. 22, 2022 – Local pension funds are exempted from the domestic debt exchange after unions threaten a general strike.
* January 2023 – Ghana requests a debt restructuring under the G20’s Common Framework process, set up in response to the COVID-19 pandemic.
* February 2023 – The finance ministry says the domestic debt exchange closed with about 85% of “eligible” bondholders on board, after five deadline extensions.
* March 2023 – The government and a group of holders of about $13 billion in international bonds start debt restructuring talks via their respective advisers.
* May 2023 – Ghana’s official creditors form a committee co-chaired by China and France and commit to restructuring their loans to the country. These “financing assurances” pave the way for the IMF board to approve the $3 billion rescue loan, five days later.
* June 2023 – The government sends a restructuring proposal to official creditors, as it aims to cut $10.5 billion in interest payments over the following three years.
* October 2023 – Ghana and the IMF reach a staff-level agreement on the first review of the $3 billion loan programme, with a second $600 million payout contingent on agreeing a debt rework plan with official creditors. The finance ministry proposes a 30-40% haircut to bondholders; bond prices sink in response.
* January 2024 – Ghana reaches a deal-in-principle to restructure $5.4 billion of debt to its official creditors. The IMF approves the next loan tranche disbursement a week later.
The government tells overseas bondholders that it wants a simple debt restructuring, rather than using any “state-contingent debt instruments”, which link payouts to variables such as economic growth or commodity prices.
* February 2024 – Ghana’s president replaces Ken Ofori-Atta as finance minister with his deputy Mohammed Amin Adam, who pledges to keep the IMF programme on track.
* March 2024 – Ghana and the international bondholder group kick off formal talks.
* April 2024 – Ghana and bondholders fail to strike a deal, with the government saying the proposals put forward were not extensive enough to cut its debt to a level the IMF would judge as sustainable.
* May 2024 – Ghana’s government confirms that a draft memorandum of understanding has been received from its bilateral creditors. Once signed, the MoU will formalise the $5.4 billion agreement reached in January with the likes of France and China.
* June 2024 – Ghana and its international bondholders reach an agreement in principle on restructuring of its dollar bonds.
* September 2024 – Ghana launches its consent solicitation and bonds exchange offer to investors.
* October 2024 – The government says more than 90% of investors voted to approve the restructuring of the bonds following the offer.