2022 has been a very tough year for almost everyone, but even more so for Ghanaians. The most recent blow served to investors pretty much sums up how bad it’s been for them.
Last week, the Ghanaian government asked its domestic investors to accept losses on interest payments on local bonds.
Key takeaways:
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Ghana asked local investors to accept losses on interest payments attached to its domestic bonds.
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As we saw with Russia in 1998, a domestic default could trigger a banking crisis and economic contraction.
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The $3 billion IMF bailout will help Ghana bounce back in the future after a challenging 2023.
Essentially, investors who trusted the nation's sovereignty by investing in its local bonds will lose returns on these investments because Ghana can no longer afford to make interest payments.
The debt-ridden country’s default on domestic loans and a potential 30% haircut on external loans qualified it for
