Ghana’s Dollar Bonds Decline Following “Shock Therapy” Spending Cuts Announcement
Ghana’s dollar bonds fell by nearly 1.5 cents after Finance Minister Cassiel Ato Baah Forson announced “shock therapy” spending cuts, aiming to address significant external debt service costs. The bonds maturing in 2035 reached an eight-week low before recovering slightly. Ghana had previously restructured $13 billion in debt after its 2022 default.
Ghana’s dollar-denominated international bonds experienced a decline of nearly 1.5 cents following the announcement of proposed spending cuts termed “shock therapy” by Finance Minister Cassiel Ato Baah Forson. Notably, the bonds maturing in 2035 were particularly affected, dropping to an eight-week low before recovering slightly to register a 1.15 cent loss, as indicated by Tradweb data.
During the initial budget presentation under President John Dramani Mahama, Minister Forson highlighted the country’s significant external debt service obligations over the next four years. The recent financial challenges come on the heels of Ghana’s completion of a restructuring effort concerning $13 billion of international bonds in October, following a difficult debt default in 2022.
In summary, Ghana’s dollar bonds have declined due to the government’s announcement of necessary spending cuts, which are aimed at addressing substantial external debt costs. The economy continues to navigate the repercussions of its past debt default while attempting to stabilize through these current financial strategies.
Original Source: www.tradingview.com
