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Ghana’s Racing to Restructure Domestic Debt against a Self-imposed Deadline of September

The banks are pushing the government for better terms in restructuring their cocoa debt holdings, as part of negotiations where success is important for goals set for the country by the International Monetary Fund. The government is offering a 12% rate on five new bonds maturing in 2025 through 2029, according to three people familiar with the matter. These would replace cocoa bills paying an average of 30%, a cut the banks consider too sharp since it would wipe out around 40% of face value, they said. The bills are used to finance Ghana’s production of cocoa, of which it’s a major world supplier. Instead, the lenders want to get similar terms to a domestic debt exchange that closed in February, where the maximum cut in the rate lenders suffered was 10.7 percentage points. Even though the cocoa obligations don’t form part of public debt because they are owed by state-owned Ghana Cocoa Board, reorganizing them is in line with IMF’s demand to reduce the institution’s debt and strengthen its balance sheet.