Finance Minister, Ken Ofori-Atta has said there will be no alternative of salvaging the crumbling economy if the government halts the Domestic Debt Exchange programme.
It follows agitations from individual bondholders demanding that they be excluded from the government’s debt exchange programme.
Although the programme is an important step in securing the International Monetary Fund (IMF) bailout, a group of Individual Bondholders fear that it may bring untold economic hardship to the country and would potentially make their bonds worthless.
In a yet to be aired interview with Joy News, Minister Ofori-Atta said the crucial nature of the situation, according to the Minister, presents the need to ensure a balance between keeping the nation afloat and ensuring the protection of the citizens’ livelihood.
“We have a situation where our debt exchange is necessary… we have a situation where we have come out of certain formulations and we have gone ahead to discuss or the financial institutions that way to mitigate that. I think we’ve done that successfully,” he said.
“In the same way we sat with the Union pensions, and I think we are making great progress in what we do for them. In the same way in which we are looking at individual bondholders to see how we can tweak this. Would we lose a bit of what we have? I think all of us are going to. But we have to make sure that what we eventually come up with will create a sustainability,” he explained.
Meanwhile, the Minority in Parliament has called for the immediate suspension of government’s debt exchange programme, citing it will impoverish millions of Ghanaians and destabilise the financial sector.
Ranking Member on Parliament’s Finance Committee, Dr Cassiel Ato Forson, who made the call said the programme has to be halted while government engages stakeholders further.
He also cautioned that the Debt Exchange Programme will collapse the country’s banking sector if not halted and reviewed.
The former Deputy Minister for Finance predicted that some five (5) commercial banks risk collapsing should the Akufo-Addo goes ahead with the programme.
Speaking to journalists in Parliament, Dr Forson bemoaned the lack of liquidity support for the said banks, explaining that they have been locked up in government bonds.
“The banks will collapse. In fact I project a minimum of five banks if this (Debt Exchange Programme) goes ahead. Not only that; a number of banks will have to lay off some staff and close some of their branches,” the MP said.
He went on to explain that the banks thrive on depositors’ monies hence there will be liquidity issues and some banks will not be able to pay depositors.
“When you go to the banks and ask for your money, there is the possibility that you won’t get your money,” he added.
Debt Exchange Programme
Government last year announced Ghana’s Domestic Debt Exchange Programme to invite holders of bonds to voluntarily exchange approximately GH¢137 billion domestic notes and bonds of the Republic, including ESLA and Daakye for a package of new bonds.
As a result, existing domestic bonds were to be exchanged as of December 1, 2022, for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.
The annual coupon on all these new bonds will be set at zero per cent in 2023, five per cent in 2024 and 10 per cent from 2025 until maturity.
Coupon payments will be semi-annual.