Ghana’s dollar bonds declined nearly 1.5 cents after Finance Minister Forson announced ‘shock therapy’ spending cuts. The 2035 bonds reached an 8-week low during this period. Significant external debt service costs loom over the next four years, complicating the fiscal landscape for the government, which restructured $13 billion in bonds following a debt default in 2022.
Ghana’s dollar-denominated bonds experienced a significant decline, dropping nearly 1.5 cents on Tuesday following Finance Minister Cassiel Ato Baah Forson’s announcement regarding necessary “shock therapy” spending cuts. These bonds, particularly the 2035 maturity bond, reached an 8-week low before recovering slightly to a loss of 1.15 cents, trading at 70.61 cents on the dollar, according to Tradweb data.
During his first budget presentation under President John Dramani Mahama, Forson highlighted the government’s urgency to implement spending cuts due to substantial external debt service obligations expected over the next four years. This announcement comes on the heels of Ghana’s recent restructuring of $13 billion in international bonds completed in October after a challenging debt default in 2022, marking crucial steps in the country’s financial recovery.
In summary, Ghana’s dollar bonds fell after the government announced necessary spending cuts termed as ‘shock therapy.’ The 2035 maturity bonds hit an 8-week low in response to these fiscal challenges. With a backdrop of significant external debt obligations and a recent restructuring history, the government’s fiscal strategies are critical for the nation’s economic stability moving forward.
Original Source: www.tradingview.com
