As part of its debt restructuring in accordance with a bailout agreement with the International Monetary Fund (IMF), Ghana has suspended payments on a portion of its foreign debt.

The West African country is in the grip of an economic catastrophe, with inflation exceeding 50 per cent and the cedi currency falling precipitously.

However, in a statement on Monday, Ghana’s finance ministry identified Eurobonds, commercial term loans, and bilateral obligations as debts that will be suspended until an orderly restructuring.

“…we are announcing today a suspension of all debt service payments under certain categories of our external debt, pending an orderly restructuring of the affected obligations,” the statement by the ministry read.

“This suspension will include the payments on: our Eurobonds; our commercial term loans; and on most of our bilateral debt,” it added.

The government declared that payments on multilateral debt, new debt (whether multilateral or otherwise), acquired after December 19, 2022, or obligations owed on a few short-term trade facilities would not be subject to the suspension.

Suspension of the foreign debt payment was described by the government as a temporary emergency measure pending future arrangements with the country’s creditors.

Already, credit rating firm Moody’s in November downgraded Ghana deeper from junk Caa2 to Ca, a slash of two levels, which is the second lowest score by Moody’s.

The Ca rating, according to Moody’s, reflects its view that private creditors will probably suffer sizable losses in the government’s planned restructuring of both domestic and foreign currency debts as part of the 2023 budget.

Moody’s also reduced Ghana’s local currency (LC) and foreign currency (FC) national ceilings from B2 to B3 to Caa1 and Caa2, respectively, echoing the two-notch downgrade of the sovereign ratings.

Ghana, formerly regarded as an investor favourite, has recently battled with its debt load. More than half of the government’s revenue goes toward paying off debt. Just this year, the decline in the cedi raised debt values by $6 billion.

The West African nation had been dealing with a debt management dilemma as the nation’s debt recorded a significant increase from $32 billion in 2017 to $54.4 billion.

The country’s debt-to-GDP ratio is expected to increase from 31.3 per cent in 2011 to 90.7 per cent by the end of 2022, according to the IMF.