Ghana President removes Finance Minister as Eurobond talks loom

Ghanaian President Nana Akufo-Addo replaced his finance minister as the West African nation looks to secure an agreement with commercial creditors on restructuring its debt.

Mohammed Amin Adam, currently the minister of state for finance, will replace Ken Ofori-Atta with immediate effect, the president said in a statement in the capital, Accra, on Wednesday. Twelve other ministers and 10 deputy ministers were relieved of their duties in the reshuffle, he said.

Ofori-Atta, 65, had been finance minister since 2017 and successfully led negotiations to secure a $3 billion bailout from the International Monetary Fund as well as an agreement with bilateral creditors to restructure the West African nation’s loans. He previously faced criticism for his handling of the nation’s economic crisis — Ghana’s currency plunged and yields on its eurobonds surged on concerns about the sustainability of its debt — and survived a censure motion in parliament in December 2022.

Ghana’s government reached a deal with bilateral creditors last month to restructure $5.4 billion of loans and has set a target date of March 31 of reaching a similar agreement with commercial creditors. The country is gearing up for presidential elections that are scheduled to take place in early December.

Ghanaian dollar bonds accounted for 11 of the 20 worst-performing bonds in a Bloomberg index of emerging and frontier market debt as of 12:45 p.m. in London. Bonds due in 2051 were among those the worst affected, falling 1.2% to 44.28 cents on the dollar.

“It’s difficult to know for sure if this could delay or accelerate the debt restructuring process,” said Adriaan du Toit, director of emerging-market economic research at AllianceBernstein. “It’s more likely to be the former, which creates more uncertainty and risks. Even more so with the elections scheduled for later in the year.”

Ofori-Atta’s removal “was expected before the elections given the finance minister’s unpopularity in the wake of the 2022 economic crisis,” said Thys Louw, portfolio manager at asset manager Ninety One UK Ltd. “The market will be worried that we are back to square one in terms of the external debt restructuring, but overall I think any delay based on change is likely to be limited.”

Adam, 49, previously served as deputy minister of energy before his appointment as minister of state at the Finance Ministry. He holds a PhD. in petroleum economics from the Centre for Energy, Petroleum & Mineral Law and Policy at the University of Dundee in the UK and an MPhil (Economics) and a BA in Economics from the University of Cape-Coast.

Source: bloomberg