The government will on Monday launch the Debt Exchange programme announced in the 2023 budget.
This is after series of engagements with key stakeholders.
The Ghana Debt Exchange (GDX) programme has been informed by a Debt
Sustainability Analysis that revealed public debt, excluding overdraft,
state-owned enterprises (SOEs) and special purpose vehicles (SPVs) as a ratio
of Gross Domestic Product (GDP) to be 75.9 per cent as of the end of
September 2022.
The Minister of Finance, Ken Ofori-Atta, in the 2023 Budget Statement said a
full debt exchange programme will be outlined.
The Bank of Ghana also alluded to that in its Monetary Policy Report issued of
November 28, 2022.
The debt operation is part of a comprehensive set of measures for reducing the
present value of public debt to Gross Domestic Product (GDP) ratio to, at
least, 55 per cent in the medium term by offering an effective cap on interest
payments on public debt.
Sources indicate that except for Treasury Bills (T-bills), all locally issued
bonds and notes of the government will be eligible for the domestic debt
exchange.
This suggests that bonds and notes denominated in US dollars and bonds issued
by ESLA and Daakye will be eligible under the GDX.
Available information indicates that the proposed GDX, which invites eligible
holders to voluntarily tender their holdings, does not entail any nominal
haircut, as promised by President Akufo-Addo.
However, it involves extending the maturity period and a reduction in the
average coupon rate.
Persons close to the issue have intimated that the debt exchange programme will
complement both expenditure rationalisation and revenue-enhancing measures
outlined in the 2023 Budget and enable Ghana to unlock the IMF programme
disbursements, which is critical to mitigating the current pressures on public
finance, the Cedi and inflation.
Domestic debt exchange: No haircut on treasury bills, principal bonds
In a televised announcement on Sunday night (December 4, 2022), the Minister of
Finance, Ken Ofori-Atta said there will be no “haircut” on the principal
of bonds and that individuals with government bonds will have their full
investments on maturity.
On allegations of possible haircuts on all bonds and treasury bills
following government’s debt restructuring deal with the International Monetary
Fund (IMF), Mr. Ofori-Atta said government will ensure that people’s
investments are safe.
“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.
Mr Ofori-Atta added that the government has concluded the broad contours
of the debt sustainability analysis and details on Ghana’s domestic debt
exchange will be launched on Monday, December 5, 2022.
Source: graphic.com.gh