The Minister for Finance, Ken Ofori-Atta has launched Ghana’s Domestic Debt Exchange Programme with the hope of restoring the nation’s capacity to service its debt.
Speaking at the launch at the Ministry of Information on Monday, December 5, 2022, the Finance Minister said the objective of the Programme is “to invite holders of domestic debt to voluntarily exchange approximately GH¢137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.”
Mr. Ofori-Atta said it was time for his Ministry and the Government to take such drastic measures now because “the Government may not be able to fully service its debt down the road if no action is taken.”
“The Debt Sustainability Analysis (DSA) demonstrated unequivocally that Ghana’s public debt is unsustainable, and that the Government may not be able to fully service its debt down the road if no action is taken. Indeed, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues, while our total public debt stock, including that of State-Owned Enterprises and all, exceeds 100% of our GDP. This is why we are today announcing the debt exchange, which will help in restoring our capacity to service debt.”
He also reiterated the Government’s assurances that there will be no haircut on the principal of bonds and Treasury Bills, against rumours that investors are well on their way to losing their investments in a debt restructuring drive to be soon undertaken by the Government.
“Let me repeat this fact as plainly as I can, in this debt exchange, individuals holding domestic bonds will not lose, they will not be affected, and they will retain the value of their investments. So let us remove any doubt and discard any speculation that the Government is about to cut your retirement holdings.
“As already announced, Treasury Bills are completely exempted, and all holders will be able to recover the total amount of their investment on maturity. There will be no haircuts on the principal of bonds and individuals that holds bonds will not be affected.”
Rumours of investors in bonds and Treasury Bills were rife last week that the Government was about slashing their returns, which reportedly led to panic withdrawals.
Mr. Ofori-Atta to this end, pleaded with the media to be circumspect and disseminate the right information regarding the current economic crisis and the Government’s debt exchange program in order not to create unnecessary panic among investors.
He added that the various stakeholders and regulators in the financial sector have been engaged to ensure the success of the exchange program.
“Specifically, the Bank of Ghana, the Securities & Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority will ensure that the impact of the debt operation on your financial institution is minimized, using all regulatory tools available to them.”