Here’s how Ghana has borrowed from the International Capital Market since 2007

Since gaining independence from Britain in 1957, Ghana has relied heavily on loans for its development as grants from its development partners waned overtime.

The country has borrowed mostly from external sources (i.e. multilateral and bilateral creditors) and in recent times, domestic sources.

Though the overreliance on loans was aimed at fast-tracking development of the country in its formative years and realizing self-reliance in a short time, it led to a steep rise in debt accumulation, throwing the country into debt repayment crisis within a decade after independence.

According to the International Monetary Fund (IMF), Ghana began experiencing debt servicing crisis by the end of 1965.

Though there was no significant increase in the public debt stock during the period of the country’s political instability in the late 60s to the late 70s, the debt crisis persisted due to low export earnings and the general economic decline.

The situation led to the adoption of the ‘yentua’ (to wit: we won’t pay) policy, a radical and unconventional move by the Acheampong-led military government to force external creditors to cancel the country’s debt.

In 1983, Ghana initiated the Economic Recovery Programme to reverse the economic decline, stabilise prices of commodities and maintain a favourable balance of payments position.

But that did little to resolve the debt crisis as the country continued borrowing excessively and raising its debts to unsustainable levels.

And by 2002 under the President John Agyekum Kufour-led administration, the country had signed up for the World Bank and IMF’s Heavily Indebted Poor Countries (HIPC) initiative, seeking debt forgiveness from its creditors.

Despite enjoying $3.7 billion in debt service relief from the IMF and the World Bank under HIPC, the Kufour regime decided to expand the country’s borrowing beyond the multilateral and bilateral credit facilities, venturing into the Eurobond market.

Fact-check Ghana, in this report, details the country’s borrowing from the International Capital Market and the amounts of Eurobonds issued under each government since Ghana’s maiden entry into the market and the current outstanding Eurobond debt.

Ghana’s debut on the Eurobond market

Ghana made its debut on the International Capital Market (ICM) in 2007, issuing US$750 million in Eurobonds to offset budget deficit. It then returned in 2013 and had been consistent on the market until it was priced out in 2022.

Bond issuance under John Mahama as president

After 6 years of absence from the market, Ghana made a return to the Eurobond market in 2013 under the NDC government led by John Dramani Mahama.

The reason for the return was to raise an amount of US$1 billion to clear maturing debts and finance capital expenditure in the 2013 Budget.

According to media report, although the transaction was oversubscribed by 100 percent, the government settled for US$1 billion. The bond had a 10-year maturity period at a coupon rate of 7.875.

This was captured in the 2014 Budget Statement (Appendix 18), the 2016 Annual Debt Management Report (pg. 9)  and the 2022 Annual Debt Management Report (pg. 22).

In 2014, Ghana made its third appearance on the ICM and issued another US$1 billion bond. This followed approval from Parliament, in December 2013, which gave the government the green light to issue up to US$1.5 billion for capital expenditure in the 2014 budget and refinancing of existing debt.

This resulted in the issuance, in September 2014, of a 10-year Eurobond valued at US$1 billion at a rate of 8.25 percent.

The bond was said to have been oversubscribed by more than US$2.9 billion but the government settled for US$1 billion. (2015 Budget Statement pg.33-34)

Ghana issued another US$1 billion Eurobond at a coupon rate of 10.75 percent with a maturity of 15 years in 2015.

The Minister of Finance, at the time, stated that “the 2015 issue is the fourth Eurobond, and was oversubscribed to the tune of US$2 billion, of which US$ 1 billion was accepted”. (2016 Budget Statement pg.181).

The Annual Debt Management Report (pg.9) for 2016 indicates that government borrowed US$94.64 million in 2016 from the Eurobond market at a rate of 6 percent with a maturity of 2 years and US$750 million at 9.25 percent with a weighted average tenor of 5 years.

This was to partly refinance part of the maturing bond in 2017 and to make up for budget shortfall.

Therefore, putting the figures together, the accumulative Eurobond issuance under the Mahama administration was US$3.84 billion.

By the end of 2016, the total debt owed to Eurobond holders was US$3.949 billion. (2016 Annual Debt Report Appendix 1)

Bond Issuance under Nana Akufo-Addo as president

In December 2016, Ghana held its seventh general elections that saw a change in government. The Akufo-Addo-led government assumed office on January 7, 2017.

It abstained from the International Capital Market in its first year in office.

The country went back to the ICM to borrow in 2018 on the back of positive economic forecasts and credit ratings.

It successfully issued a US$2 billion Eurobond in May 2018. The bond consisted of US$1 billion each of 10-year and 30-year instruments and was said to be the largest Eurobond ever issued by Ghana with the longest maturing period of 30 years and at the lowest rate in the country’s history on the ICM. (2018 Annual Debt Report pg. 33).

US$750 million of the proceeds was used to finance infrastructure and other capital expenditure approved in the 2018 Budget, US$830 million “to switch the 2022 Eurobond and the remaining was lodged in the Sinking Fund for further liability management,” the government said in the 2019 Budget. (pg. 11 and 51).

The 2018 Eurobond issuance was the sixth time Ghana borrowed from the Eurobond market.

The country’s seventh appearance on the capital market in 2019 was significant as it issued its first triple-tranche Eurobonds.

“An amount of US$3,000.0 million was raised in three (3) tranches of 7-year, 12-year, and 31-year Eurobonds of US$750.0 million, US$1,250.0 million and US$1,000.0 million, at coupon rates of 7.88 percent, 8.13 percent, and 8.95 percent, respectively,” the 2019 Annual Public Debt Report captured. (Pg. 17).

Proceeds of the bond were used to buy back maturing Eurobonds, support the 2019 Budget and for liability management operations. (Pg. 18 of 2019 Annual Debt Report). (2020 Budget Statement pg. 42-43).

Ghana, again, in 2020, raised a total of US$3 billion from the Eurobond market in 3 tranches, consisting of US$1.250 billion, US$1 billion and US$750 million at coupon rates of 6.75 percent, 7.876 percent, and 8.750 percent with maturity tenors of 6 years, 14 years and 41 years respectively. (2020 Annual Public Debt Report pg. 18 and 2021 Budget Statement pg.38).

The proceeds were used for debt restructuring and liability management operations.

At the time, Ghana appeared to be among the market’s favourites and thus, continued its exploits on the capital market in 2021 after surviving COVID-19.

The 2021 Eurobond was issued in March 2021 at a face value of US$3.025 billion in 4 tranches.

“The transaction saw Ghana issue a 4-year zero coupon Eurobond of US$525.0 million, in addition to 7-year, 12-year, and 20-year Eurobonds of US$1,000.0 million, US$1,000.0 million, and US$500.0 million, at coupon rates of 7.750 percent, 8.625 percent, and 8.875 percent, respectively.” (Pg. 19 of the 2021 Annual Public Debt Report).

As usual, the proceeds were used for budget support and liability management.

By the end of 2021, Ghana had borrowed an accumulative US$11.025 billion from the Eurobond market in 4 years under the Akufo-Addo administration.

But it wanted more and in the 2022 Budget, indicated its intention to borrow more from the capital market. (Annual Public Debt Report pg. 21).

However, due to its spiraling debt levels and negative credit ratings, it was priced out of the market. The government had to turn to the International Monetary Fund (IMF) for a bailout.

Debt restructuring

The government made the announcement in July 2022 and started negotiations with the Bretton Woods Institution in September same year.

As part of the conditions for the bailout, it was supposed to restructure its debts both domestic and external. The domestic debt restructuring was done in 2023.

On June 12, 2024, the government announced that it had reached a memorandum of understanding (MoU) with its Official Creditor Committee to restructure its bilateral debts, adding that, “the agreement will also bolster the current and ongoing discussions with private creditors, with whom Ghana remains committed to finding a comparable agreement as early as possible”.

A July 8 press release by the Ministry of Finance indicated that its bilateral lenders through the Official Creditor Committee approved an “Agreement In Principle” it had reached with Eurobond holders to restructure the US$13.1 billion owed to the bondholders.

The Eurobond debt exchange began on September 5, 2024, and was completed on September 30, 2024, with about 98 percent participation, the Ministry of Finance announced on October 4.

In conclusion, Ghana since 2007 went onto the Eurobond market 9 times and borrowed a total of US$15.615 billion in Eurobonds. The country issued its first Eurobond of US$750 million in 2007 under President John Agyekum Kufuor.  Between 2013 to 2016 under the erstwhile Mahama regime, it issued a total amount of US$3.84 billion in Eurobonds and US$11.025 billion from 2018 to 2021 under the current administration. The outstanding Eurobond debt is US$13.103 billion, which has now been restructured.