The Minister for Finance, Ken Ofori Atta, has indicated that the Domestic Debt Exchange Programme (DDEP) has positively affected the nation’s domestic debt portfolio’s costs and risk indicators.
For instance, he mentioned that the average interest rate has decreased from 21.2 percent at the end of December 2022 to 12.7 percent at the end of September 2023.
Additionally, the Average Time to Maturity (ATM) improved from 2.7 years at the end of December 2022 to 6.2 years at the end of September 2023.
On the total debt portfolio, the ATM improved from 8.4 years at the end of December 2022 to 9.3 years at the end of September 2023.
Presenting the 2024 budget to the Legislative House on Wednesday, November 15, 2023, Finance Minister Ofori Atta observed “We anticipate that the completion of the external debt restructuring will improve our debt trajectory even more, to enable us reach our target landing zone of 55 percent debt to GDP in present value terms by 2028”.
He explained that the external debt restructuring parameters comprise bilateral and commercial debt (including Eurobonds).
Consequently, on December 13, 2022, Ghana formally requested a debt treatment under the G20 Common Framework for Debt Service Suspension Initiative (CF-DSSI).
The Minister said that Ghana’s bilateral creditors subsequently established the Official Creditor Committee (OCC) on May 12, 2023, under the auspices of the Paris Club, to restructure the bilateral debt.
He said that the government has already shared illustrative scenarios with the OCC, which is co-chaired by France and China, adding that an agreement in principle on the restructuring parameters is expected to be reached in the coming week and will be formalised in an MOU between the government and the OCC.
On commercial debt (Eurobonds), Ofori Atta told the House that Ghana has received illustrative proposals on the debt treatment scenarios from the two bondholder groups.
In that direction, “We are currently reviewing the illustrative proposals and expect to converge towards a solution in compliance with the comparability of treatment principles. We outlined broad parameters in our investor presentation of a haircut between 20% and 40%, a maximum 5% interest rate, and maturity not to exceed 20 years”.
