Ghana’s dollar-denominated bonds fell nearly 1.5 cents after Finance Minister Cassiel Ato Baah Forson announced necessary ‘shock therapy’ spending cuts. The bonds retraced slightly to a loss of 1.15 cents while facing significant external debt costs over the next four years, following prior restructurings post-2022 default.
On Tuesday, Ghana’s international dollar-denominated bonds experienced a decline of nearly 1.5 cents following remarks by Finance Minister Cassiel Ato Baah Forson regarding necessary spending cuts referred to as ‘shock therapy.’ The bonds maturing in 2035 saw a significant decrease, reaching an 8-week low but later adjusted to a loss of 1.15 cents, trading at 70.61 cents on the dollar, as indicated by Tradweb data.
During the first budget presentation under President John Dramani Mahama, Minister Forson highlighted the challenges the government faces, including considerable external debt service costs projected over the next four years. This statement comes after Ghana completed a restructuring of $13 billion in international bonds in October, following a difficult debt default in 2022.
In summary, Ghana’s dollar bonds have faced a notable drop following the announcement of drastic spending cuts by the Finance Minister. Despite some recovery in bond value, the challenges posed by substantial external debt burdens remain significant. The recent restructuring of international bonds highlights the ongoing economic difficulties faced by the country.
Original Source: www.tradingview.com
