Ghana escapes ban on foreign commercial borrowing
Ghana’s decision to issue US$3 billion in Eurobonds early in the year rather than later has enabled it circumvent a major conditionality for the US$500 million in debt relief it is now to receive from bilateral creditors this year, as agreed by the Group of 20 biggest economies (G-20) a fortnight ago. This is a ban on taking of non-concessionary external borrowing while the suspension is in place, which is the rest of 2020. If Ghana had not already issued Eurobonds this year, it would have had to go through intense negotiations with the International Monetary Fund and the World Bank in order to do so later this year.
Exceptions may be allowed for countries enjoying the debt suspension initiative that are in compliance with limits agreed under the IMF’s Debt Limit Policy and the World Bank’s policy on non-concessional borrowing – it is uncertain whether Ghana would have qualified as an exception under these criteria – but that is now moot since Ghana would not have wanted to go to the international capital markets for the rest of this year anyway.