Ghana is grappling with its worst economic crisis in decades, prompting the government to pursue an $3 billion International Monetary Fund (IMF) support package, as reported by Nipah Dennis (AFP) on January 5, 2023. To secure this relief, Finance Minister Ken Ofori-Atta is urging at least 80% of local bondholders to join a voluntary domestic debt exchange by January 31, a deadline critical as of August 27, 2025, when the situation’s aftermath continues to resonate.
Economic Crisis and IMF Deal
Following a staff-level agreement with the IMF in December 2022, Ghana aims to address a crisis marked by over 54% inflation, a sharply devalued cedi, and a $6 billion debt increase due to global pandemic effects and the Ukraine war. The nation has defaulted on most external debts and requested bilateral restructuring, making the debt swap a prerequisite for IMF board approval. Ofori-Atta, after meeting bondholders, emphasized the voluntary nature of the program, targeting 80% participation to meet IMF conditions. “We are asking everybody to really join,” he stated, highlighting the program’s role in stabilizing the economy.
Debt Swap Details and Opposition
The swap requires bondholders, predominantly pensioners, to exchange existing bonds for lower-value ones with zero coupons until 2024, a move that has sparked resistance. Retired doctor Benjamin Aidoo, 65, called it “totally unfair,” noting the loss of retirement funds needed for school fees, medical bills, and rent. Senyo Hosi of the Individual Bondholders Forum echoed this, accusing the Akufo-Addo government of overspending and shifting burdens onto the poor amid a high cost of living. “What crime did we commit to lose what we legitimately earned?” Hosi asked, threatening protests or strikes if exemptions are denied.
Government’s Stance and Political Implications
President Nana Akufo-Addo, who initially resisted IMF aid but reversed course, has rallied Ghanaians to support the effort, though the government spends over half its revenue on debt servicing. With elections two years away and Akufo-Addo set to step down after two terms, the crisis management could sway political fortunes. The bondholders’ opposition, fueled by economic hardship, adds pressure as the January 31 deadline looms, with the outcome likely to shape Ghana’s fiscal recovery and political landscape into 2025.
