The finance ministry said Accra would not pay debts including European bonds, commercial loans and most bilateral loans.
Ghana has suspended payments on most of its foreign debt, effectively leading to default as the country struggles to cover its balance of payments deficit.
The country’s finance ministry said on Monday it would default on debt including European bonds, commercial loans and most bilateral loans, calling the decision an “urgent measure”. provisional,” while some bondholders criticized the lack of clarity in the decision.
The finance ministry said the government was “ready to enter into discussions with all external creditors to ensure Ghana’s debt is sustainable”.
The debt payment suspension reflects the perilous state of the economy, which led the government last week to hit $3 billion in staff. agreement with the International Monetary Fund (IMF).
Ghana has announced a domestic debt swap program and says an external restructuring is being negotiated with creditors. The IMF said that a comprehensive debt restructuring is a condition of its support.
The country has been struggling to refinance its debt since the start of the year after being downgraded by multiple credit rating agencies over fears it would not be able to issue new European bonds.
That has pushed Ghana’s debt into distressed territory. Its public debt stood at 467.4 billion Ghanaian cedi ($55 billion according to Refinitiv Eikon data) in September, of which 42 percent was domestic.
Accra had a balance of payments deficit of more than $3.4 billion in September, down from a $1.6 billion surplus at the same time last year.
While 70 to 100 percent of government revenue is currently going toward debt repayment, the country’s inflation has skyrocketed 50 percent in November.
Ghana has experienced what some consider the worst economic crisis in a generation.
Last month, more than 1,000 protesters marched through the capital Accra, calling for the president’s resignation and protesting against deals with the IMF as fuel and food costs skyrocket.
Its total international reserves stood at about $6.6 billion at the end of September, equivalent to less than three months of imports. That’s down from about $9.7 billion at the end of last year. The government said the suspension would not cover multilateral debt payments, new debts made after December 19, or debts related to certain short-term commercial establishments.
Ghana’s international bondholders confirmed in a statement to Reuters news agency late on Monday the formal launch of a creditor committee aimed at facilitating an “orderly resolution of the issue.” and comprehensive” on the country’s debt challenges.
Any good faith negotiations should avoid unilateral actions and require the timely exchange of detailed economic and financial information between international bondholders, the government and the IMF, the Committee of Creditors said. .