Ghana’s dollar bonds fell nearly 1.5 cents after Finance Minister Cassiel Ato Baah Forson announced necessary spending cuts termed ‘shock therapy.’ The 2035 bonds saw a decline to an eight-week low before slightly recovering. Forson also indicated that the government faces substantial external debt servicing costs over the next four years, amidst a restructuring of $13 billion in international bonds following a 2022 debt default.
Ghana’s dollar bonds experienced a decline of nearly 1.5 cents on Tuesday, following the announcement of significant spending cuts by Finance Minister Cassiel Ato Baah Forson, referred to as ‘shock therapy.’ This reduction particularly affected the 2035 maturity bonds, which fell to an eight-week low before recovering slightly to a loss of 1.15 cents, trading at 70.61 cents per dollar according to Tradweb data.
During the inaugural budget presentation under President John Dramani Mahama, Minister Forson highlighted the challenges posed by substantial external debt servicing costs projected for the upcoming four years. Earlier in October, Ghana finalized a restructuring of $13 billion in international bonds after enduring a difficult debt default in 2022.
In summary, Ghana’s announcement of drastic spending cuts has led to a marked decline in the value of its dollar bonds. The situation reflects ongoing challenges in managing external debt servicing amidst economic restructuring efforts. The government’s approach highlights the delicate balance required in addressing financial issues following a significant debt crisis.
Original Source: www.tradingview.com
