Even though Ghana could soon have access to the international capital markets for new dollar borrowings, some observers have cautioned government to be mindful of its debt levels.
This is the view of some international investors and Eurobond holders after government reached a deal on restructuring about $13.1 billion.
Ghana has over the past two years been prevented from going onto the international market to raise dollars from investors, due to rising debt levels, slow economic growth and low balance of payment account.
Government was shut out of that market after; it announced that it is working to restructure debts owed commercial creditors.
The Eurobond holders have also disclosed that, government is now undertaking some measures which will protect investors’ funds. It is expected that the conclusion of the debt restructuring will restore some market confidence.
Other financial observers have however warned that it will not be prudent for government to immediately rush to the capital market to raise funds in dollars considering the country’s debt levels.
This, they argue could have a negative impact on the economy since Ghana was first of all forced to go to the International Monetary Fund (IMF) for bailout due to over borrowing.
End of debt restructuring
Eurobond holders are expected to forego about $4.7 billion owed them by the Government of Ghana.
This is part of agreement reached with the Bondholders in restructuring a $13.1 billion debt.
The term sheet covering the Eurobond deal, showed that the Bondholders will also provide a cash flow of $4.4 billon, during the period under the International Monetary Fund (IMF) programme.
The concessions are needed, according to the new deal to restore debt sustainability under the Fund Programme.
Government is also proposing two options, under the deal.
This is the P.A.R and Disco Option. According to the agreement, investors who take the Disco option will receive three new bond instruments.
However the P.A.R option will have up to 1.6 Billion cedis CAP.