Ghana: A Case Study of Sovereign Debt Restructuring under the G20 Common Framework

Facing major fiscal and balance-of-payments headwinds, Ghana embarked on a comprehensive restructuring of its sovereign debt in December 2022.It was assessed that to return to sustainability, Ghana’s public debt should decline from nearly 90 percent of GDP to 55 percent of GDP with significant debt service reduction in the short run. The paper describes how this complex restructuring was implemented, by telling a happier story compared to that of Zambia under the same G20 Common Framework, providing a useful yardstick against which subsequent debt restructurings would likely be measured. While bilateral creditors (including China) had significantly less exposure to Ghana than private bondholders, they still took the lead in the process. At the end of the day, the speed of Ghana’s exchange—which was in line with recent cases of comprehensive debt restructuring programs—can at least partially be attributed to the decision to restructure domestic debt along with external debt, which provided for a more even burden sharing among creditor categories. However, questions remain about the design and implementation of the domestic exchange, emphasizing the need for a more thorough approach in dealing with domestic creditors, given the financial stability and future growth considerations.