Ghana’s Domestic Debt Exchange Program Announced

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Finance Minister Ken Ofori-Atta
Finance Minister Ken Ofori-Atta

The Minister for Finance and Economic Planning, Hon. Ken Ofori-Atta has revealed that the broad contour of the Debt Sustainability Analysis has been concluded and details on Ghana’s Domestic Debt Exchange will be launched today.

Announcing that yesterday evening, the finance minister averred that, as stated in his budget statement to Parliament on November 24, 2022, that government will undertake a debt operation programme, the External Debt restructuring parameters will be presented in due course.

Meanwhile, under the Programme, domestic bondholders will be asked to exchange their instruments for new ones whilst Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037. 5% in 2024 and 10% from 2025 until maturity.

“Coupon payments will be semi-annual,” he said.
He also announced that Government is committed to, in line with negotiations with the IMF, restore macroeconomic stability in the shortest possible time and enable investors to realize the benefits of this Debt Exchange.

“The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups. In line with this, Treasury Bills are completely exempted and all holders will be paid the full value of their investments on maturity, There will be no haircut on the principal of bonds, individual holders of bonds will not be affected,” he said.

Ken Ofori-Atta also mentioned that, Government recognises that financial institutions hold a substantial proportion of these bonds and as such, the potential impact of the exchange on the financial sector has been assessed by their respective regulators, therefore these regulators have put in place appropriate measures and safeguards to minimize the potential impact on the financial sector and to ensure that financial stability is preserved.

“Specifically, The Bank of Ghana, the Security and Exchanges Commission, the National Insurance Commission and the National Pensions Regulatory Authority will ensure that the impact of the debt operation on your financial institutions is minimized, using all regulatory tools available to them.”

He also revealed that a financial Stability Fund (FST) is being established by Government with the help of development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes to ensure that they are able to meet their obligations to their clients as they fall due.

He admitted that Ghana is in difficult times but government is counting on the support of all Ghanaians and the investor community to make the exercise successful.

“We are confident that these measures will contribute to restoring macroeconomic stability,” he said.

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