Minority dismisses governments debt exchange programme

The Minority caucus in Parliament Monday dismissed the government’s debt exchange programme intended to restructure the country’s debt into more sustainable levels.

Addressing Parliamentary Press Corps in Parliament at a news conference, Mr Haruna Iddrisu, Minority Leader, said the form and structure of the programme were unacceptable.

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

Mr Iddrisu expressed worry about why the contours of the debt restructuring plan were not included in the 2023 Budget Statement and Economic Policy presented by Mr Oforit-Atta, the Minister for Finance, in his budget presentation to the House.

“How come the contours of this exchange programme were not announced in the budget statement that was presented to Parliament? Were invested consulted, were bondholders consulted, and how did he come to this conclusion?” he asked.

Mr Iddrisu, who is the Member of Parliament for Tamale South on the ticket of the National Democratic Congress told the Press Corps that the Finance Minister’s restructuring of the terms of a loan agreement without approval from parliament was contrary to the 1992 constitution and would be rejected by the Caucus.

The government on Sunday, December 4 announced a slash in interest payments for domestic bondholders to zero per cent in 2023 and pegged 2024 interest payments at 5 per cent.

According to the government, there would be no haircut on the principal of bonds, adding that individuals with government bonds would have their full investments upon maturity.

In his public address on the current economic situation, Mr Ofori-Atta said the government would ensure that people’s investments were safe.

He announced that interest payments for domestic bondholders for 2024, would be pegged at only 5 per cent, adding that from 2025, the rate increases to 10 per cent.

He said: “Under the domestic bonds exchange 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 these bonds will be set at zero per cent in 2023, 5 per cent in 2024 and 10 per cent from 2025 until maturity. 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 haircuts on the principal of bonds, and individual holders of bonds will also not be affected,” Mr Ofori-Atta said.

As a critical part of the ongoing negotiations with the International Monetary Fund to secure Ghana $3 billion in support for the economy, the government is exchanging already sold bonds for new ones with a more flexible interest payment plan.