The Bank of Ghana (BoG) has explained that obtaining a bailout from the International Monetary Fund (IMF) would have been difficult without the Domestic Debt Exchange Programme (DDEP).
Dr. Philip Abradu-Otoo, the Director of Research at the central bank, noted that the BoG incurred substantial losses to help stabilize the national economy.
To tackle the economic difficulties, the government launched an IMF programme and introduced the DDEP, which led to some bondholders seeing reductions in their investments and interest payments.
This programme was essential for securing the needed support from the IMF.
In 2022, the BoG reported a loss of GHS 60.9 billion due to impairments stemming from the domestic debt exchange programme. These impairments were a result of the financial restructuring efforts aimed at economic stabilization.
In an interview with Citi TV, Dr. Abradu-Otoo pointed out the challenges the government would have encountered without the DDEP.
He stressed that without the debt exchange programme, the government would have had to reconsider other aspects of the DDEP, complicating the process further.
Dr. Abradu-Otoo linked the significant losses incurred by the BoG in 2022 to the domestic debt exchange programme.
He asserted that the central bank bore the brunt for the country, showing its dedication to supporting the government’s efforts to stabilize the economy.
“The biggest one was the impairment we had on the securities that we were holding. Just like any other individual, the BoG was also holding government securities.
“Out of that GHS 60.9 billion, GHS 48 billion of that were impairment. That is the losses that we incurred on our books, as a result of the DDEP.
He emphasised, “For the debt exchange programme, nobody had a haircut on the principal…for the BoG, we had the side haircut, and top haircut and the amount itself was cut into two.
“We had three, we had to do that because we needed that to secure the IMF programme. It would have been tough to move forward very fast. Then we would have come back to the drawing board and relook at the other parts of the DDEP,” he said.