A financial analyst, Jerome Kuseh, has urged the government to treat local investors fairly should it decide to restructure its external and domestic debt.

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According to him, there is a need for the government to restructure external debts, as doing so would aid domestic investors to avoid losses in their businesses. “Now let’s say you are going to give them [local investors] a haircut, but the foreign investors who only decided to only buy your Eurobonds, they are not going to be subjected to a haircut. Where is the fairness in that situation?” “The domestic market stayed with you and kept oversubscribing, even to treasury bills. Now, these investors are going to be punished,” he is quoted by citibusinessnews.com.

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The need for debt restructuring has recently arisen due to Ghana’s debt stock growing unsustainable as a result of the depreciation of the Ghana Cedi and the difficulty in obtaining loans as a consequence of downgrades by rating agencies.

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Debt restructuring, a strategy adopted by business entities or individuals, happens when a debtor in financial difficulty receives a concession from a

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creditor in line with a consensual agreement or a court order.

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The procedure entails haggling over a lower interest rate and extending the loan’s repayment time. This approach can help debtors who are struggling to pay their bills due to numerous factors that may have posed a challenge for them to do so under the terms and conditions that have been agreed on.

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The government of Ghana is expected to participate in some debt restructuring procedures as part of the country’s debt sustainability agreement with the IMF.

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According to the IMF, the initiative will strengthen the legitimacy of government policies, re-establish trust in the central bank’s ability to control inflation, and build up foreign exchange reserves to sustain the local currency against adverse circumstances. However, financial experts argue that a restructuring of the country’s debt may cause a number of banks to go bankrupt suddenly.

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In the meantime, former Deputy Minister of Finance, Cassiel Ato Forson, has asserted that the country’s debt is unmanageable as “public debt to GDP is now about 100 percent” therefore, debt restructuring is currently the only option for the country.

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