Quick overview
- Ghana is in a dispute with Afreximbank over a $768.4 million debt amid a challenging debt restructuring process.
- Afreximbank claims preferred creditor status, asserting that its loans should not incur losses during restructuring.
- The Ghanaian government, however, does not recognize this status and includes Afreximbank’s debt in its restructureable envelope.
- This dispute may impact future debt negotiations for Ghana and other financially troubled African nations.
Ghana is embroiled in a dispute with the African Export-Import Bank (Afreximbank), one of its largest commercial creditors, over a $768.4 million debt, following a challenging debt restructuring process.
Afreximbank’s loan should be managed along with other debts that Ghana’s finance ministry has already restructured. This includes $13 billion in eurobonds and bilateral loans from China. Lenders typically agree to lower interest rates, extend payment deadlines, or accept partial losses, commonly called “haircuts.”
However, Afreximbank asserts that it should not be required to incur any losses. A designation typically granted to organizations such as the World Bank or the International Monetary Fund (IMF), the Cairo-based bank claims to have “preferred creditor status.
” With this status, their loans are fully repaid, prioritized before those of other creditors, and are not subject to restructuring.”
The Ghanaian government does not recognize Afreximbank as a preferred creditor, and we do not consider their debt to be superior to any other restructureable debt, according to Finance Minister Cassiel Ato Forson.
The debt from Afrexim is included in our restructureable envelope. Ghana’s debt resolution process, which began after its default in December 2022, may be delayed by the dispute. More significantly, it might influence future debt negotiations regarding the treatment of regional lenders like Afreximbank, not only Ghana or other financially troubled African nations like Zambia, Kenya, and Ethiopia.
Olumide Adesina
Financial Market Writer
Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.