Ghana to default on most external debt as economic crisis worsens - Reuters

ACCRA, Dec 19 (Reuters) - Ghana connected Monday suspended payments connected astir of its outer debt, efficaciously defaulting arsenic the state struggles to plug its cavernous equilibrium of payments deficit.

Its concern ministry said it volition not work debts including its Eurobonds, commercialized loans and astir bilateral loans, calling the determination an "interim exigency measure", portion immoderate bondholders criticised a deficiency of clarity successful the decision.

The authorities "stands acceptable to prosecute successful discussions with each of its outer creditors to marque Ghana's indebtedness sustainable", the concern ministry said.

The suspension of indebtedness payments reflects the parlous authorities of the economy, which had led the authorities past week to scope a $3-billion staff-level statement with the International Monetary Fund (IMF).

Ghana had already announced a domestic indebtedness speech programme and said that an outer restructuring was being negotiated with creditors. The IMF has said a broad indebtedness restructuring is a information of its support.

The state has been struggling to refinance its indebtedness since the commencement of the twelvemonth aft downgrades by aggregate recognition ratings agencies connected concerns it would not beryllium capable to contented caller Eurobonds.

That has sent Ghana's indebtedness further into the distressed territory. Its nationalist indebtedness stood astatine 467.4 cardinal Ghanaian cedis ($55 cardinal arsenic per Refinitiv Eikon data) successful September, of which 42% was domestic.

It had a equilibrium of payments shortage of much than $3.4 cardinal successful September, down from a surplus of $1.6 cardinal astatine the aforesaid clip past year.

While 70% to 100% of the authorities gross presently goes toward servicing the debt, the country's ostentation has changeable up to arsenic overmuch arsenic 50% successful November.

Ghana has been experiencing what immoderate accidental is its worst economical situation successful a generation. Last month, more than 1,000 protesters marched done the superior Accra, calling for the resignation of the president and denouncing deals with the IMF arsenic substance and nutrient costs spiralled.

Its gross planetary reserves stood astatine astir $6.6 cardinal astatine the extremity of September, equating to little than 3 months of imports cover. That is down from astir $9.7 cardinal astatine the extremity of past year.

The authorities said the suspension volition not see the payments towards multilateral debt, caller debts taken aft Dec. 19 oregon debts related to definite short-term commercialized facilities.

'NOT COMING OUT OF THE BLUE'

Holders of Ghana's planetary bonds confirmed successful an emailed connection precocious connected Monday the ceremonial motorboat of a creditor committee aimed astatine facilitating the "orderly and broad resolution" of the country's indebtedness challenges.

Any bully religion negotiations, the creditor committee said, would request to debar unilateral actions and necessitate the timely speech of elaborate economical and fiscal accusation betwixt planetary bondholders, the authorities and the IMF.

The steering committee was made up of Abrdn, Amundi, BlackRock, Greylock and Ninety One, the radical said successful its statement.

Kathryn Exum, who co-leads Gramercy's Sovereign Research department, was hopeful astir indebtedness restructuring, noting that it should beryllium easier for creditors than different caller emerging marketplace restructurings.

"It is much consecutive guardant than the likes of Sri Lanka and Zambia, successful the respect that determination is not a batch of China debt," Exum said connected Friday successful comments anticipating the outer restructuring.

One bondholder who requested anonymity said the deficiency of item successful the announcement could beryllium origin for interest for investors.

Ghana's outer bonds, which are trading astatine a profoundly distressed level of 29-41 cents successful the dollar, dropped with the 2034 enslaved losing much than 3 cents, Tradeweb information showed.

Nonetheless, immoderate investors said the suspension of outer indebtedness outgo was expected.

"It is successful enactment with Ghana getting into talks astir restructuring with assorted indebtedness holders, truthful not coming retired of the blue," Rob Drijkoningen, co-head of emerging marketplace indebtedness astatine Neuberger Berman, which holds immoderate Ghanaian Eurobonds.

Ghana did wage a Dec. 16 coupon owed connected a 2049 Eurobond, according to a idiosyncratic acquainted with the matter.

It was not instantly wide if the indebtedness work suspension would see a $1 cardinal 2030 enslaved that has a $400 cardinal World Bank warrant .

"We volition not beryllium commenting connected the specifics of immoderate peculiar enslaved oregon indebtedness owed astatine this time, but... we are afloat engaging each stakeholders," a concern ministry spokesperson told Reuters.

($1 = 8.5000 Ghanaian cedi)

Reporting by Christian Akorlie and Cooper Inveen; Additional reporting by Rachel Savage, Marc Jones and Jorgelina bash Rosario; Writing by Rachel Savage and Cooper Inveen; Editing by Karin Strohecker, Ed Osmond, Arun Koyyur and Aurora Ellis

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