The Cedi strengthened to 12.32 per dollar from 12.65 at last week’s close as the suspension of external debt servicing payments eased the strain on dollar supplies. Ghana has been widening negotiations with external creditors, holding talks with China on $1.9bn of debt, a third of its obligations to bilateral lenders. China has been pushing back on accepting a haircut on its loans, saying it wants its debt treated the same as multilateral lenders such as the World Bank, which are exempted from the restructuring. Reduced pressure on the currency allowed the Bank of Ghana to ease its FX support, selling just $5.2m into the market compared to $10.75m a week earlier. We expect the Cedi to continue strengthening toward the 12 level in the near term.
Ghana had announced the suspension of payments on most of its external debt December last year, effectively defaulting on its debt obligations as it faces its worst economic crisis in decades.
The country suspended payments on its Eurobond, commercial term loans, and on most of its bilateral debt, a week after a $3 billion agreement with the International Monetary Fund (IMF). The IMF had demanded a comprehensive debt restructuring as a condition for support.
Ghana’s finance ministry called the decision an “interim emergency measure”. It said the government “stands ready to engage in discussions with all of its external creditors to make Ghana’s debt sustainable.”
