(Bloomberg) -- Ghana is planning a debt-exchange program to lower its borrowing costs after an analysis of the sustainability of its loans showed the West African nation faces a high risk of distress.

The government is committed to ensuring debt is brought to sustainable levels in the medium- to long-term, Finance Minister Ken Ofori-Atta said in a 2023 budget speech on Thursday in the capital, Accra. As part of its restructuring plan, the government will scrutinize its debt operations, said Abena Osei Asare, a deputy minister of finance.

“The debt exchange will be new terms that will replace existing terms and exchange debts with longer tenures at cheaper rates,” Asare said in an interview. “This will help return debts to sustainable levels.” Treasury bills won’t be affected, she said, without providing further details.

Ghana is struggling with a currency that’s among the world’s worst performers. The weakening cedi has fueled inflation and drained foreign reserves. President Nana Akufo-Addo’s government is considering revamping part of its 190.3 billion cedis ($13.1 billion) of local debt, to win International Monetary Fund support for a loan of as much as $3 billion.

Ghana’s foreign-currency denominated debt strengthened as Ofori-Atta spoke. The yield on the country’s 2032 eurobonds fell 67 basis points to 30.23% at 2:33 p.m. in Accra. Still, the speech left investors wanting more information about the the debt exchange plan.

Ofori-Atta’s statement that Ghana will implement a debt-exchange program to address challenges was “not good enough,” and needed to have gone further by saying when this would be done, said Maciej Woznica, a Stockholm-based fixed-income portfolio manager at Coeli Frontier Markets AB. 

“Keep in mind, it’s a Thanksgiving holiday today -- so impossible to judge market reaction until Monday,” Woznica said. “Another caveat -- it’s so cheap compared to everything else.”

Read: Ghana Set to Start Debt-Restructuring Talks for Local Bonds

Other Key Highlights:

  • Ofori-Atta also set out measures to boost revenue and rationalize government spending in 2023. They include:
    • Raising the value-added-tax rate by 2.5 percentage points to directly support road, digitalization agenda
    • Fast-tracking the implementation of the Unified Property Rate Platform program
    • Cutting the levy on electronic transactions -- known as the e-levy -- to 1% from 1.5%
    • Maintaining a 30% cut in public-servant salaries
    • Placing a cap on salary adjustments at state-owned companies.
  • Ofori-Atta forecast a fiscal deficit equivalent to 7.7% of gross domestic product next year, while economic growth is seen at 2.8%.

--With assistance from Colleen Goko.

©2022 Bloomberg L.P.