The Government of Ghana defaulted on its coupon payment for the 2030 Eurobond on April 14, 2023, due to the debt moratorium declared on December 19, 2022.
However, the International Development Association (IDA) of the World Bank has made a guarantee payment of $372 million on behalf of the Ghanaian government to cover the Eurobond.
The payment was made on April 20, 2023.
In 2015, Ghana approached the World Bank for assistance when it faced challenging market conditions, had high debt levels maturing soon, and lacked access to international financial markets.
The Ministry of Finance requested a policy-based guarantee and a credit from the IDA to raise the necessary funds to repay upcoming debt.
The IDA provided a policy-based guarantee, which allowed Ghana to issue a $1 billion Eurobond series due in 2030.
IDA’s guarantee covered up to $400 million in both principal and interest, and Ghana utilized the proceeds to refinance its existing debt.
The government has since bought back and cancelled $70 million of the 2030 Eurobond, reducing the guarantee amount to $372 million.
The funds raised through the Eurobond issuance enabled Ghana to refinance its existing debt at a lower interest rate of 10.75% and extend the maturity of its debt to an average of 15 years, up from 90 days to two years.
Due to significant economic, financial, and social pressures, the Ministry of Finance declared a moratorium on certain categories of its external debt, including Eurobonds, on December 19, 2022. Subsequently, the majority of its domestic debt was restructured, and debt treatment under the G20 Common Framework was requested.