Ghana At The Cross Roads: SULLEYMAN ABDUL-WAHAB WRITES
Ghana At The Cross Roads: SULLEYMAN ABDUL-WAHAB WRITES
The government of Ghana’s Debt Sustainability Analysis (DSA) Report which it hopes to present to the IMF to get the much-anticipated staff-level agreement by end of the year 2022 is contingent on the planned (announced) Debt Exchange Programme (DEP) with domestic bondholders and a further contemplated 30% haircut for International Bondholders.
Ghana is now initiating the consultative process with its international bondholders with the aim of giving them a 30% haircut for our debt to be sustainable to qualify us for an IMF bailout. Anything short of that, we are not sustainable, and IMF will not lend to us.
Our first hurdle to cross is that the proposal should be mutually agreed to by the parties. The reason is that the announcement of a proposed DEP with international bondholders will immediately trigger a sovereign Raters downgrade of Ghana. Additional downgrade will come if the proposed DEP enters into litigation.
In the event of a default, another downgrade will follow. Essentially, every step we take has unforeseen consequences. We can only hope that our advances are met with a positive welcome.
READ:Cedi Rallies On Debt Exchange Announcement
However, if the reactions coming from our local market (domestic bondholders/stakeholders) are anything to go by, then we must expect its worst form from international bondholders. Remember that if they disagree with our proposal, they have the capacity to sue Ghana in a London Court. And if they sue, they will win.
On this note, I will like to ask; have you, as a Ghanaian for once stopped to imagine what will happen if there is a pushback or a complete rejection of our proposed Debt Exchange Program with these international bondholders or domestic stakeholders?
Bear in mind that these bondholders constitute the stakeholders of the first quadrant of the matrix.