Ghana’s cedi and eurobonds extended gains Monday as the nation expects International Monetary Fund board approval for a $3 billion bailout this week.
The West African country anticipates the disbursement of “the first tranche of $600 million will come immediately” when the IMF board meets on Wednesday, Minister of State for Finance Mohammed Amin Adam said Monday. The next $600 million will follow in November, with the remainder to be disbursed in equal portions of $350 million every six months, subject to IMF reviews, he said.
Ghana’s currency strengthened 5.3%, the most since April 3. International bonds of various maturities also rallied, accounting for eight of the ten top performers in emerging markets on Monday. The 2035 dollar note rose 1.3 cents to 39 cents on the dollar. The government suspended payments on its external obligations in December as it engages in debt restructuring talks with creditors.
“We are expecting favorable negotiations with eurobond holders,” Amin Adam said in remarks broadcast by Accra-based CitiFM.
The West African economy is also concluding negotiations for an additional $900 million of budget support from the World Bank over the three-year period. “The approval by the IMF will have a catalytic effect as other development partners and investors will join in the country’s economic recovery,” he said.
Ghana last week secured financing assurances from a bilateral creditors group that China and France are co-chairing, paving the way for the IMF’s board to approve the bailout program. The official creditors committee formally constituted on May 12, and its members are committed to negotiating terms of a restructuring to be finalized in a memorandum of understanding, the group said in a statement.
Ghana is using the Group of 20’s so-called Common Framework to restructure its debt as part of measures to secure the IMF program. The mechanism seeks to improve coordination between the traditional Paris Club of sovereign creditors and new ones like China, now the biggest lender to emerging nations. Zambia and Ethiopia are also using the framework to try and revamp their liabilities.
