Ghana is facing the worst economic crisis in decades. Inflation in the country is over 40% and the national currency has lost more than half of its value. In an attempt to stem the phenomenon and avoid payment default, domestic debt restructuring measures took effect on Monday.
To try to do faced with the economic crisisthe Ghanaian Finance Minister, Ken Ofori-Atta, announced the creation of a new series of bonds to replace the securities whose maturity was reaching maturity.
A sovereign bond is a medium or long-term bond issued by a State in a currency other than its own and which provides for the repayment of 100% of the capital at maturity. States issue bonds to cover their financing needs. Theoretically, sovereign bonds are considered safe investments.
And the objective of these is to quickly stabilize the Ghanaian economy in turmoil, explains Mr. Ofori-Atta. ” Our commitment to Ghanaians and the investment community, in line with ongoing negotiations with the IMF, is to restore macroeconomic stability as soon as possible and allow investors to realize the benefits of this debt restructuring. “, he explained, indicating that the government of Ghana “ worked hard to minimize its impact on investors holding sovereign bonds “.
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In a note dated at the end of October, the financial analyst S&P Global warned of the significant impact that such a restructuring would have on local banks, because they are the ones who hold a large share of sovereign bonds.
Specific measures have therefore been taken in this direction, reassured the Minister of Finance. ” The potential impact of this exchange on the financial sector has been assessed by their respective regulators. Working together, regulators have put in place appropriate measures and safeguards to minimize the potential impact on the financial sector and to ensure financial stability is preserved. “, he assures.
Next step: the restructuring of the country’s external debt. Ghana is also in talks with the IMF for obtaining a loan of 3 billion dollars.