On Thursday, February 16, 2023, Ghana’s Finance Minister, Ken Ofori-Attah, was in Parliament to present a statement on the country’s Domestic Debt Exchange Programme (DDEP).
In his address, he highlighted who was exempt from the Programme, including pensioners.
According to the Finance Minister, all pensioners who did not tender their old bonds for new ones during the exercise have been excused from the programme.
Ghana’s Debt Restructuring Programme
1. Around 85% of bonds were tendered in the Exchange as of February 14, 2023 (as determined by the Central Securities Depository).
2. On December 5, 2022, the Ministry of Finance formally inaugurated the Domestic Debt Exchange (DDE), with the goal of restructuring about Gh137 billion in government bonds and notes.
3. As of December 2022, the total outstanding debt (Eligible and non-Eligible Holders) amounted to approximately Gh¢137 billion.
Domestic Debt Exchange Programme
1. Participation in the programme has always been “Voluntary”.
2. Since the DDE Programme’s initial announcement on December 5, 2022, the government has continued to interact with various stakeholders on the program.
3. The DDEP’s final terms are as follows:
Category A includes Collective Investment Schemes and Natural People under the age of 59;
Category B includes Natural Persons 59 and older;
General Category Holders include all other holders excluding those in Categories A and B.
4. The government is developing a number of prudential measures to offset the potential impact on domestic creditors.
The government is recalibrating regulatory mechanisms in collaboration with the Bank of Ghana, the Securities and Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority.
5. The government is establishing a Financial Stability Fund (FSF) with the assistance of development partners to provide liquidity and solvency support to banks, pension funds, insurance companies, fund managers, and collective investment schemes in order for them to meet their obligations to their clients.
6. What the government is doing to include pensioners:
The government remains devoted to the well-being and dignity of our senior citizens and pensioners.
Yes, it has caused me tremendous grief because a number of them have been picketing at the Ministry of Finance’s facilities since Monday, February 6, 2023.
The government will honour their coupon payments and maturing principals, as it does with other government bonds, in accordance with the government’s fiscal commitments.
I met with our senior citizens three times in order to better understand their issues. The most recent was yesterday, February 15th, 2022, when I outlined the new bonds’ terms.
All pensioners who did not engage in the exchange are excluded, thus there will be no need for our Senior Citizens to protest at the Finance Ministry.
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Activities with External Debt
1. Ghana has officially requested a Debt Relief Initiative under the G-20 Common Framework from its bilateral creditors.
2. The Ministry of Finance has begun the process of negotiating with our commercial debtors in good faith. Two preliminary conversations and information exchanges have begun on a positive note with representative committees and advisors.
3. The government and the Ministry of Finance are also addressing important creditors such as China and India to ensure that our conversations with the Paris Club be expedited.
4. The Ministry of Finance has begun conversations with representatives of our overseas bondholders and their advisors. Substantive conversations are expected to begin with them in the coming weeks.
Post-Debt Activities
1. The government will continue to secure an IMF program to improve economic confidence while increasing domestic mobilization efforts.
2. To supplement its fiscal operations for the year, the government sought finance from the Bank of Ghana.
3. The Bank of Ghana completed work on its financial records for 2022 last week, reporting that the total overdraft extended to the government for 2022 was GHC 37,956.82 million.
4. The Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills, and the Growth and Sustainability Levy Bill must all be passed by Parliament.
5. The requirement to obtain Board approval for our IMF program by the end of March 2023.
Conclusion
1. For the fiscal year 2023, the Ministry of Finance expects Treasury Bills and concessional loans to be the key sources of funding.
2. The Finance Minister will return to Parliament in August with the appropriate fiscal changes for consideration and approval after the debt operation is completed.
Sources: Ministry of Finance, Ghanaweb
