Ghana Eurobonds Gain After Debt Deal With Bilateral Creditors

Ghana’s Eurobonds gained in the market following an announcement that the country had secured a debt relief deal with its bilateral creditors. The agreement could potentially free up significant amounts of money for the government to direct towards social and economic growth.

  The Eurobonds’ prices increased while their yields, which move inversely to prices, declined. This indicates increased investor confidence in the Ghanaian government’s capacity to handle its foreign debt and the overall positive impact on the country’s economy. While the exact terms of the agreement were not disclosed, the relief is likely to include extended deadlines for debt repayments and possible reduction of the total debt amount. Ghana’s total external debt stood at around $21.8 billion in September 2021, accounting for 49.3% of the country’s gross domestic product (GDP). This is good news for Ghana which has been struggling with high debt levels for some years now. The deal with the bilateral creditors is part of a broader international effort to help African countries burdened with heavy debts, to regain financial stability and fuel economic growth. However, some economists warn that such debt relief measures should not discourage African nations from pursuing fiscal discipline. High borrowing costs and debt service obligations can significantly limit a country’s capacity for productive investments and hamper economic growth. On the other hand, countries that receive debt relief will likely enjoy improved credit ratings, reduced interest rates, and more flexibility in managing their public finances, all of which can boost the health of the economy and the wellbeing of the citizens. In a similar vein, Nigeria, another country that carries a large foreign debt burden, has recently been successful in securing a debt relief agreement with Paris Club of creditors, creating hopes for better financial stability and economic recovery. Overall, the performance of Ghana’s Eurobonds indicates the market’s positive reaction to the debt relief deal, signalling the potential for improved economic health in the nation.