Ghana fails to reach debt deal with international bondholders

Ghana has faced challenges in striking a deal with two bondholder groups to restructure $13 billion of international bonds, with the International Monetary Fund indicating that the deal may not meet its debt sustainability criteria. Benjamin Boachie, Chief Economist at Secondstax, shared insights on the situation in a recent CNBC Africa interview. Ghana's inflation rate has been a cause for concern, with a recent uptick to 25.8 percent in March. Boachie highlighted the need for a hawkish stance to combat inflation, emphasizing the importance of anchoring future inflation expectations. Ghana's economic growth and debt restructuring options have been key points of discussion in negotiations with bondholders. Boachie pointed out that bondholders are looking for equity exposure to Ghana's economy, but reaching an agreement that aligns with IMF guidelines remains a challenge. Comparisons were drawn with Zambia's debt talks, noting that Ghana's negotiations may face obstacles due to the diverse nature of creditors involved. Despite the complexities, Boachie expressed optimism about Ghana's economic performance under the IMF programme, predicting a swift approval for the next tranche of funds. The negotiations with bilateral creditors and private bondholders are crucial steps in achieving a sustainable debt deal. Boachie emphasized the need for both parties to find a middle ground that balances interests and aligns with IMF parameters for debt sustainability. Looking ahead, the focus will be on maintaining economic stability amid the upcoming election season. Boachie commended Ghana's commitment to fiscal discipline and structural reforms, highlighting the importance of continuity in policy implementation. As the election approaches, ensuring adherence to spending constraints will be crucial for sustaining economic progress. Overall, Ghana's ability to navigate the debt negotiations and adhere to IMF guidelines will determine its path to economic stability in the coming months.