Structure of government's debt restructuring plan is unacceptable – Minority

The Minority in Parliament has raised concern about the structure of Ghana’s Domestic Debt Exchange programme announced by Finance Minister, Ken Ofori-Atta.

The Minister of Finance on Sunday, December 4 provided an update on discussions on the country’s debt operation programme.

He said under the Programme, domestic bondholders will be asked to exchange their instruments for new ones. 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.

The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity whilst coupon payments will be semi-annual.

Addressing the media in Parliament on Monday, December 5, Haruna Iddrisu said after reviewing Ghana’s Domestic Debt Exchange programme, it is unable to accept it in its current form.

“Let me state, without any fear of contradiction, that the form and structure of the debt restructuring plan announced by Ken Ofori-Atta is unacceptable to us, and we simply will not accept it,” the Minority Leader said.

He quizzed, “I shudder to ask how come that the contours of this debt exchange programme was not announced in the Budget statement that was presented to parliament. Were investors consulted? Bondholders were they consulted? How did he come to this conclusion? Are we not right to state that this amounts to an economic imposition…”

Meanwhile, Finance Minister Ken Ofori-Atta has assured that Treasury Bills are completely exempted from haircuts 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,” the Minister added.

This is to minimise the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups, the Finance Minister.