Ghana requests G20 Common Framework debt restructuring -source

By Jorgelina do Rosario and Christian Akorlie

LONDON/ACCRA (Reuters) – Ghana requested on Tuesday to restructure its bilateral debt under the common framework platform supported by the Group of 20 major economies, a source familiar with the situation told Reuters.

The crisis-hit nation becomes the fourth country to apply to the G20 initiative launched in 2020 and designed to streamline debt restructuring efforts in the wake of poorer countries buckling under the fallout from the COVID-19 pandemic.

The West African country was pushing bilateral creditors to form a committee as soon as possible, aiming for an “expedited treatment”, said a second source, who asked not to be named because the talks are private.

The request came as part of a virtual presentation by Ghana’s finance ministry hosted under the auspices of the group of creditor nations known as the Paris Club, the source added.

Ghana’s debt restructuring under the common framework aims to include non-Paris club members, such as China in debt relief talks. China is Ghana’s biggest bilateral creditor with $1.7 billion of debt, while the country owes $1.9 billion to Paris club members, according to data from the International Institute of Finance (IIF).

The Paris Club declined to comment. Ghana’s finance ministry did not immediately respond to a request for comment.

Reuters reported first on Thursday that Ghana was seeking debt treatment under the G20 programme.

Ghana, which secured a $3 billion staff-level agreement with the International Monetary Fund (IMF) in mid-December, has been hesitating on this request due to the long delays faced by other countries using the process.

The platform has been widely criticised for its glacial progress. While Chad secured a deal with creditors in November, Zambia is still locked in talks and Ethiopia’s progress was held up by civil war.

The formation of an official creditor committee is a key step the country needs to formally seek financial assurances from bilateral creditors that they are willing to enter a debt rework process.

Without these assurances, the IMF’s executive board would delay the programme’s approval and in consequence, money disbursements.

Some bondholders said Ghana opting to go down the common framework route put the prospect of a swift resolution further out of reach.

“With the common framework and the poor track record on the timeline for that, it just makes things more uncertain,” said Anders Faergemann, portfolio managers at PineBridge Investments. “Ghana needs the IMF and now it’s just going to take longer.”

Ghana’s bonds fell on Tuesday with the issue featuring a partial World Bank guarantee slipping more than 1 cent to trade just below 70 cents in the dollar while other bonds hovered at deeply distressed levels of 35-40 cents, Tradeweb data showed.

(This story has been refiled to fix typo in headline.)

(Reporting by Jorgelina do Rosario in London and Christian Akorlie in Accra, Additional reporting by Leigh Thomas in Paris and Rachel Savage in Johannesburgh, Editing by Karin Strohecker, Raissa Kasolowsky, Elisa Martinuzzi and Aurora Ellis)