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International investors greeted the removal of Ghana’s finance minister with caution on Wednesday, as they braced for the prospect of more delays to the restructuring of the country’s overseas debt ahead of national elections in December.
The replacement of Ken Ofori-Atta with Mohammed Amin Adam, minister of state in the finance ministry, was not expected to completely scupper negotiations over the debt restructuring. But the prices of eurobonds issued by Ghana slipped on the fresh uncertainty.
Ghana is seeking relief on some $13 billion owed to private creditors holding eurobonds. Ofori-Atta had overseen the debt restructuring efforts after the West African gold, oil and cocoa producer defaulted on much of its external debt in December 2022 as debt servicing costs and inflation soared.
“There could be some risk regarding a delay as the (new) minister of finance catches up,” said Thys Louw, portfolio manager for emerging markets hard currency debt strategy at asset manager Ninety One.
“But overall, this is unlikely to derail a deal before the elections,” he said. “The broad parameters of what is required to get a deal are well understood by both sides and unlikely to be altered by a new minister of finance.”
Ghana’s bond prices fell on the news, the latest to hit a country recovering from its worst economic crisis in a generation.
A note maturing in 2026 fell 0.55 cents on the dollar to a three-week low of 46.5 cents, Tradeweb data showed.
Ghana’s economy has started to recover since the government secured a US$3 billion loan programme with the International Monetary Fund (IMF) last year.
It had been ready to move forward with its debt restructuring after securing a deal to rework $5.4 billion of debt in January with official creditors, such as China and France.
Government officials met with bondholders last month and their advisers, as the gold and cocoa producer hoped to get a deal completed by mid-February with a simple debt restructuring to exchange old bonds for new notes.
Some bondholders, however, increasingly favour the use of so-called state-contingent debt instruments as a way of bridging differences in their outlook on a country’s economic trajectory.
“We know that the government had received very mixed feedback from investors when they revealed the initial parameters of the restructuring back in October/November and that more work is needed,” said Nick Eisinger, an emerging markets debt portfolio manager at Vanguard, one of the world’s biggest asset managers.
“In this sense, we would hope the reshuffle moves things forward, but it is not clear.”
Some analysts said Ofori-Atta’s removal could bring more spending in an election year.
“We interpret this (change) as a signal that fiscal consolidation slippages in order to salvage the ruling party’s flailing electoral campaign are now more certain,” said Bright Simons, a vice president of Accra-based think tank IMANI Africa.
Others were confident, given IMF support.
“Given that the fiscal path is anchored by the IMF program and elections later this year, my sense would be that this is unlikely to change the fiscal outlook very meaningfully,” said Goldman Sachs economist Andrew Matheny.
An IMF spokesperson said by email that the fund looked forward to continuing its cooperation with the new finance minister, adding, “Our commitment to assisting Ghana in achieving its objectives remains steadfast.”
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