Debt restructuring: Assurance of no haircuts covers principal

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As Ghana considers some debt restructuring, the Information Minister, Kojo Oppong Nkrumah, has clarified that the president’s assurances of no haircuts with respect to money invested in bonds cover just the principals for the time being.

“My understanding is that no principals will be touched. No principals will have a haircut,” Mr. Nkrumah said on the Citi Breakfast Show.

The minister however added that “the debt sustainability strategy is yet to be announced in full.”

“When they are done with the rest of the strategy, and they come out and do a full announcement, we will have clarity on the form that the debt restructuring will take,” he said.

The concerns over debt restructuring have accompanied the government’s negotiations with the International Monetary Fund for a $3 billion bailout.

As to the fate of interest expected on the principals, Mr. Nkrumah said, “I think we should give them time to come out and announce the full details of the debt sustainability strategy.”

The minister further said the president’s assurances, which came via an address on Ghana’s economic crisis, were in response to rumours about haircuts on principals.

Ghana’s talks with the IMF mission are expected to resume in the coming weeks as the government works to manage its almost GHS 400 million debt.

Moving forward, to address the debt situation, the president said the government plans to reduce the total public debt to GDP ratio to about 55 in present value terms by 2028, with the servicing of external debt pegged at not more than 18 percent of annual revenue also by 2028.

It is expected that the government will have to restructure the debt to make it more sustainable in order to qualify for the $3 billion support from the IMF.

The Finance Ministry recently said it is committed to reaching an agreement with the IMF as soon as possible.

The government is optimistic that it will have a deal in place before the 2023 budget is read next month.

 

 



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