TIG Post

Tag: Domestic Debt Exchange Program

  • World Bank grants $250m to support Ghana’s financial sector

    World Bank grants $250m to support Ghana’s financial sector

    The World Bank has sanctioned a $250 million credit from the International Development Association (IDA) for the five-year Ghana Financial Stability Project.

    This initiative will bolster Ghana’s Financial Sector Strengthening Strategy (FSSS) by enhancing financial stability through the recapitalization of viable banks and Specialized Deposit-taking Institutions (SDIs) affected by Ghana’s Domestic Debt Exchange Program (DDEP).

    The financial system is vital to the Ghanaian economy, offering essential services to households, businesses, and the government, and facilitating economic growth.


    To mitigate the severe impacts of the Domestic Debt Exchange Program (DDEP) on financial institutions, the government established the Ghana Financial Sector Stability Fund (GFSF) to provide solvency support to banks, pension funds, insurance companies, fund managers, and collective investment schemes.

    “This project will enhance Ghana’s financial stability by providing solvency support to banks and SDIs impacted by the DDEP through the GFSF,” said Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone. “By directly supporting banks and SDIs, the project will benefit Ghana’s financial sector and the economy, ensuring depositors and other financial consumers have access to savings, payments, and other core financial services from adequately capitalized banks and SDIs.”

    The Ghana Financial Stability Project is expected to immediately assist eligible undercapitalized but viable banks and SDIs and will be available to other banks and SDIs that may require support in the future due to potential new losses, thus providing a safety net against unexpected financial setbacks.

    “The World Bank Group’s support aims to mitigate short-term shocks and improve prospects for long-term sustainable development and resilience against future challenges. The project promotes financial stability, crucial for protecting individuals and preserving jobs,” said Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead.

    The project complements the World Bank’s Development Program Financing series and the IMF-Extended Credit Facility, which support reforms to enhance the macroeconomic environment, enabling financial institutions to operate profitably and generate internal capital.


    It also aligns with other World Bank-funded projects aimed at economic recovery and job creation in Ghana, such as the Ghana Development Financing Project, which supported the establishment of the Development Bank of Ghana and provides long-term financing to small and medium enterprises and small corporates.

  • Ghana is now on autopilot – CPP

    Ghana is now on autopilot – CPP

    The governing New Patriotic Party (NPP), according to the Convention People’s Party (CPP), has no strategy in place to modernize and advance the nation.

    In its message to mark Ghana’s 66th independence anniversary, the party noted that the Nana-led administration had put the country on autopilot.

    “Today, Ghana under the NPP Government has no Plan in place to develop this nation, they have put the Country on ‘Auto Pilot’ and only use Adhoc measures as and when they deem fit.

    Today Ghana has run to the IMF for an economic bailout, there is an IMF supervisor at the Bank of Ghana to give us instructions on our fiscal instructions, we are being asked by the IMF to reduce our debt and unfortunately, Ghanaians are bearing the brunt of this exercise under a strange and Alien Scheme called the Domestic Debt Exchange Program (DDEP).”

    It said the country cannot honour its financial obligations to contractors.

    It averred that there is nothing to celebrate this year and asked Ghanaians to boycott the celebration.

    “As a Country, we cannot even honour our financial obligations to local and domestic contractors, vendors, suppliers, interest payments on loans taken, etc., so what are we celebrating, there is nothing to celebrate because we in the CPP believe that we have been made economic captives, who are reeling under the subjugation of poverty and Economic control.

    We should come together as a country to boycott the Independence Day Celebrations because the Akufo Addo-led NPP government’s actions have eroded the meaning of what Ghana Independence Day stands for. This is the time for a sober reflection towards getting some solutions to our problems as a nation.

    Indeed, the Nana Akufo Addo Government has made the toil of our fathers very meaningless, as we ask Ghanaians to boycott the Celebrations, we are urging all comrades in the CPP to do same as solidarity with the people of Ghana.

    It is laughable that a Government that has been touting a ‘Ghana Beyond AID’ is the one chasing the IMF for Economic Bail Out. It is also sad that a government in dire need of financial support is not ready to downsize government and reduce expenditure. We should with all our strength and might boycott the Independence Day Celebrations.

    The CPP is asking if is it worth it for the Nana Akufo Addo government to use the taxpayer’s money to remunerate cronies, family members and political hangers-on sitting on Government payroll.

    It has become obvious that the CPP is the only Party that has the blueprint to salvage this Nation from this economic quagmire we find ourselves in. When voted for in 2024 we will reshape the destiny of this nation, and showcase a new leadership style of Commitment, Concentration and Selflessness, bringing back the Confidence of the Ghanaian in every sphere of our lives.”

  • Tackle economic difficulties: UN to government

    Tackle economic difficulties: UN to government

    The United Nations Resident Coordinator in Ghana, Charles Abani, has entreated the government to tackle current economic difficulties in time to save the youth from falling prey to violent crimes.

    He made the assertion that the economic quandary was a result of the covid-19 pandemic and the unending Russian aggression, but the government must quicken its pace toward economic recovery.

    Speaking exclusively to Citi News, Mr Abani underscored the need for the government to adopt homegrown solutions to relieve stress.

    “Ghana needs to grow its production capacity and cut import significantly,” he said, adding “building Ghana’s robust economy makes it less vulnerable to shocks.”

    He added that citizens’ participation in the Domestic Debt Exchange Program is in order to secure better agreement terms for faster debt structuring agreements with the International Monetary Fund.

    He made these statements to Citi News on the sidelines of the launch of the European Union and United Nations Building Migration Partnerships Project sponsored by the European Union.

    BUILDING MIGRATION PARTNERSHIPS PROJECT

    Under the sponsorship of the European Union, a network of UN agencies launched the “Building Migration Partnerships Project” aimed at providing a guide for Ghana’s migration acceleration towards safe and orderly migration.

    The EU Ambassador to Ghana, Irchad Razaaly, said: “This project highlights the linkages between
    migration and all sectors, such as agriculture, finances, and health. This is why I am glad that it will
    contribute to building migration-related capacities in the different ministries and in various UN agencies.”

    The project aims to build the capacity of key stakeholders in the migration sector, including the
    Government of Ghana, for effective implementation of the country’s National Migration Policy towards safe, orderly, and regular migration with the goal of making migration work for sustainable development.

    It also seeks to strengthen and leverage whole-of-UN expertise to support good migration governance in
    the country.

    “As Ghana has signed up to the Global Compact for Migration, we, as policymakers, are working to put in place measures to manage our migration programmes effectively to derive migration benefits for the country’s social and economic development. This project is crucial in supporting Ghana’s migration governance. It reflects a true commitment to building migration partnerships, which is also geared towards achieving Sustainable Development Goals,” said Hon. Ambrose Dery, Minister for the Interior, in a statement delivered by the Ministry’s Chief Director, Adelaide Anno-Kumi.

    The institutional and technical capacity building will be supported through operational guidance and tools that have been developed by the Network.

    The EU Ambassador to Ghana, H.E. Irchad Razaaly, said “This project highlights the linkages between migration and all sectors, such as agriculture, finances and health. This is why I am glad that it will contribute to building migration-related capacities in the different ministries and in various UN agencies.”

    Ghana has made important strides in recent years towards improving its migration policy framework, notably through the development of a National Migration Policy. In addition to supporting the implementation of this policy, the project will help the government of Ghana achieve the 23 objectives set under the Global Compact for Safe, Orderly and Regular Migration, through the formulation and development of a comprehensive five-year Plan of Action.

    The UN Resident Coordinator in Ghana, Charles Abani, said: “Partnership and coordination is the goal for the UN. In whatever we do, we must ensure there is a joined-up approach to our actions that leverages all expertise to deliver lasting and sustainable outcomes.

    This is especially true for cross-cutting issues such as migration. With this project, and through the UN Network on Migration, we can demonstrate our intentional approach to deliver as one and be more responsive to the needs of the Government of Ghana as far as migration is concerned.”

    The launch was preceded by a media briefing attended by national editors and journalists who play a key role in contributing to balanced migration reporting and in positively changing the narrative on migration.

  • DDEP: Government issues new bonds’ final principal amounts

    DDEP: Government issues new bonds’ final principal amounts

    The government has revealed the new bonds’ final principal amounts for the Domestic Debt Exchange Program (DDEP).

    The Finance Ministry in a statement disclosed that: ”In anticipation of the settlement of the Domestic Debt Exchange Programme (DDEP) on 21St February 2023, the Government announces the aggregate principal amount of each series of New Bonds, which amounts, together with the corresponding ISINs, are set forth in Appendix A attached hereto and organized by the category of holders set forth in the Amended and Restated Exchange Memorandum dated as of 3rd February 2023 (the “Exchange Memorandum”).

    The statement clarified that New Bonds will be credited to the holder’s securities account at the Central Securities Depository (CSD) from which their Eligible Bonds were tendered.

  • DDEP: I was never threatened to stay away from picketing – Pensioner Bondholders Convener

    DDEP: I was never threatened to stay away from picketing – Pensioner Bondholders Convener

    The convener for the Pensioner Bondholders, Dr. Adu Anane Antwi, has denied reports that he received life-threatening letters as a result of his support for pensioners who want to be spared from the government’s Domestic Debt Exchange Program.

    Dr. Antwi in a disclaimer said he had never received a threatening message during his activities and advocacy that led to the exemption of pensioners from the debt restructuring programme.

    “My attention has been drawn to a tweet by one Promise Dumevi on 16th February 2023, circulating on social media attributing the following statement to me: I have received a lot of threat messages warning me to stay away from the ongoing picketing at the finance ministry. But I want to assure them that I cannot be silenced or give-up on my lifelong savings until I die.”

    He added that “I wish to inform the general public that this information is false as I have not received any threat messages, and have not said anywhere that I have received any threat messages that warned me to stay away from the picketing of pensioners at the finance ministry The general public is advised to disregard the information.”

  • I still standby my position on DDEP – Senyo Hosi

    I still standby my position on DDEP – Senyo Hosi

    The Individual Bondholders Forum’s convener, Senyo Hosi, has denied claims that his position on government’s Domestic Debt Exchange Program(DDEP) has changed.

    Following a recent media appearance on the subject, Senyo Hosi has been accused of making a U-turn on the debt exchange despite his earlier vociferous opposition to the debt swap.

    He insisted that, he finds some of the remarks from the public unpleasant.

    “I have noted various commentaries on my interview on Joy FM’s News File on 11th February 2023. While I find some of the commentary unfortunate, I absolutely respect the right of anyone to form or hold their opinions. It is also obvious to me that many may have failed to listen to the full interview and may have lost the context of the discourse. For the avoidance of doubt, I find the representation I made as consistent with the position I have held”, his statement read in parts.

    He reiterated that he hasn’t changed his mind about the fact that the debt exchange does not bode well for bondholders and financial sector trust, and that his recent appearance has been grossly misinterpreted.

    “I have one task: advocate and secure the investment interests of the IBF membership. I do not have a hate-and-bash-a-particular-person or government mandate. I will bash or commend when it gets me to the just realisation of the objects of the IBF membership I represent.”

    “All I am focused on is the protection of the legitimate interest of those who opted to trust in our advocacy. I am no poster boy for anyone’s political or personal vendetta. I pursue and stand for that which I believe in”, a concerned Senyo Hosi further stressed.

  • Honor unpaid bond obligations – Bondholders to Ofori-Atta

    Honor unpaid bond obligations – Bondholders to Ofori-Atta

    The government has been urged by the Individual Bondholders’ Forum to honor all coupon and principal payments owing to bondholders of bonds not tendered into the Domestic Debt Exchange Program (DDEP).

    In a statement, Convener Senyo Hosi reminded the Finance Minister, Ken Ofori-Atta, that payment of coupons and principal for bonds that matured since the 6th of February to date (herein referred to as ‘Due Bonds’) remain outstanding.

    Mr Ofori Atta had earlier promised individual bondholders who refused to tender their bonds into the domestic debt exchange programme will have their existing coupons honoured when the date is due for payment.

    Several pensioner Bondholders have also been picketing at the Finance Ministry for six days now to demand the government completely exclude their bonds from the domestic debt exchange programme.

    In the letter, the individual bondholders stated that honouring payments on due bonds will re-engineer public and investor confidence and trust in the activities of the Finance Ministry.

    Below is the full letter to the Finance Minister

    REQUEST FOR OUTSTANDING PAYMENTS ON DUE BONDS

    We refer to your affirmation of the Government’s commitment to honour all coupon and principal payments due to individuals with holdings of bonds not tendered into the Domestic Debt Exchange programme (DDE).

    We wish to remind you that payment of coupons and principal for bonds that matured since the 6th of February to date (herein referred to as ‘Due Bonds’) remain outstanding. With the DDE deadline of 10th of February over, we trust that Government will be in a clear position to ascertain the total bonds due for payment after the completion of the DDE settlement scheduled for 14th February 2023.

    We hereby request your advice of the date for coupon and principal payments due under the ‘Due Bonds’. It is our expectation that Government will seize this opportunity to re-engineer public and investor confidence and trust, by making the payments not later than Friday, 17th February 2023.

    We count on your cooperation.
    Sincerely,
    Senyo K. Hosi
    Convener

  • Pensioners should be exempted from DDEP – CPP to govt

    Pensioners should be exempted from DDEP – CPP to govt

    The political affairs chairman of the Convention Peoples’ Party (CPP), Kwame Jantuah is urging the government to halt the present Domestic Debt Exchange Program (DDEP) and come up with alternate solutions to the ongoing economic crisis.

    According to them, it is insensitive for the government to burden investors, while government refuses to make any fiscal adjustments.

    Ghana’s total public debt stock shot up to GH¢575.7 billion at the end of November 2022, according to new data released by the Bank of Ghana.

    The new debt figure brings Ghana’s debt to Gross Domestic Product (GDP) ratio to 93.5% from 75.9% in September 2022.

     Government is embarking on a debt restructuring programme in order to enable it access a $3 billion dollar package from the IMF to end the country’s ongoing economic woes. 

    Speaking to Citi News,the president must exempt the pensioners from the DDE.

    “All the political parties stand against it, even the NPP they are not talking about it, it’s only Ken Ofori-Atta and the President, Nana Akufo-Add talking about it. It seems everybody is scared. Those within their partycan’t even say much, why is it only one-sided? Why is the economic management team silent on the subject?

    “I would wish the President would say look, let’s exempt the pensioner bondholders from the DDEP and let’s find an alternative. Parliament should take over and find out which projects should be cut off or suspended,” Mr. Jantuah stated.

    The General Secretary of the National Democratic Party (NDP), Alhaji Frimpong noted that the government must be transparent about what the loans were used for.

    “What is happening in our national discourse over DDEP is as a result of what I would say the people being kept in the dark over a lot of issues in governance. Bondholders are agitating because the sender-messenger relationship is not properly done, people don’t know so much about what is going on,” Alhaji Frimpong indicated.

  • We will not accept a lower offer in exchange for our bonds – Yamson

    We will not accept a lower offer in exchange for our bonds – Yamson

    The government’s attempt to pressure bondholders into accepting a subpar offer through the Domestic Debt Exchange Program (DDEP) has been classified as worrying by investment advisor Harry Yamason.

    Speaking on Starr Today with Joshua Kodjo Mensah, Mr. Yamson attacked ministers and government communicators for sending bondholders a signal of uncertainty.

    He further noted that it will only require purposeful action by the government and the CST to render their bonds untradeable.

    “The government is demanding that the current bondholders surrender their bonds, their rights, their incomes to exchange for very inferior products and a very inferior offer. With no legal guarantees and is suggesting through its spokesperson and Ministers that the value will be destroyed, and tradability will not be one of the value benefits that will accrue any longer.

    “I think this is very unfortunate for the government to be promoting these narratives. The bonds as they currently exist are tradable instruments. There is actually no reason for them not to be tradable going forward. There is no legal reason for the bonds not to be tradable,” Mr. Yamson stated.

    He continued: “If the offer by the government is so superior then the government should not be worried about what decisions individuals take as to whether to sell or buy the old bonds. The matter should be left to individuals and the government should not intervene.”

    Meanwhile, Minority Leader, Cassiel Ato Forson has assured Pensioner Bondholders and others that parliament will move swiftly to address the burning issues related to the ongoing domestic debt exchange program.

    Pensioner Bondholders’ meeting with Finance Minister Ken Ofori-Atta on Friday, February 10, 2023, ended inconclusively as the government insists the retirees should consider voluntary exemption.

    In a tweet, the leader of the opposition frontbench said the Finance Minister, Ken Ofori-Atta is billed to appear before the House to deal with the concerns of investors in the debt restructuring programme.

    “It is disheartening to see our dear pensioners including a former Chief Justice picketing at the MOF over the domestic debt restructuring. I wish to assure her & the rest; parliament is dragging the Finance Minister before us next week and we will represent their interest fully!” a tweet by Ato Forson said.

  • Anxiety hits stakeholders as DDEP reaches deadline

    Anxiety hits stakeholders as DDEP reaches deadline

    As the government’s domestic debt exchange program (DDEP) neared its final hours on Tuesday, some holders of Ghana’s cedi bonds are grudgingly subscribing to it.

    Sources in government told Graphic Online Tuesday afternoon that interest had picked up quite well among institutional investors although the pace of subscription was still below expectation.

    For individual holders of the otherwise risk-free government paper, one source said: “I think there are still some difficulties here and there.”

    In spite of that the sources said it was obvious that the government would meet its target and would, therefore, not extend the offer, which ends on February 7.

    The sources, which are coordinating the process, have not been authorised to speak on the matter.

    “Some are signing on and we are hoping that by close to day, Tuesday, we will see significant participation,” one said said.

    “I think we are counting on God to see us through but as for this time round, we will not extend the deadline,” another said.

    In the offer launched December last year, the government wants investors in its cedi debts to swap their existing holdings for new ones that have a maximum maturity of five years instead.

    The offer is optional, the government said in a January 31 release that announced the extension of the programme for the fourth time in a row.

    That release also revised the terms of the debt swap in response to protests and resistance from business associations and individual bondholders that have constituted themselves into groups.

    The debt swap is needed to make the country’s debt sustainable, which is a prerequisite to sealing a US$3 billion bailout programme from the International Monetary Fund (IMF).

  • Parliament, Christian Council, others’ reticence on DDEP disturbing – Bokpin

    Parliament, Christian Council, others’ reticence on DDEP disturbing – Bokpin

    The reticence of some significant players in this country’s administration over the government’s Domestic Debt Exchange Program (DDEP), according to Professor Godfred A. Bokpin of Finance at the University of Ghana Business School (UGBS), is alarming .

    Pensioner Bondholders Forum, a group for the protection of pensioners with investment in government bonds has served notice to picket at the premises of the Finance Ministry until its members are exempted from the DDEP.

    According to the group, attempts to have their investment exempted from the programme have proved futile, the reason for their decision to picket at the Finance Ministry until their demands are met.

    Commenting on the Debt Exchange Program on Morning Starr with Francis Abban, Mr. Bokpin stated that he cannot fathom why Parliament as the representative of the people has not summoned the Minister of Finance for questioning.

    “We need all important stakeholders, you need the TUC on the table, the TUC should not just wake up because pensions were at risk. What is a pension if the whole country is not governed well? Because if you don’t do this Debt Restructuring very well, adequately and comprehensively it will show up in the next two years.

    “If you look at the terms that the Minister has proposed even for the Individual Bondholders you are looking at the principal repayment in 2025 at a time he will not be there. Even the opposition party what is their stake and their contribution in this Debt Restructuring?” Mr. Bokpin queried.

    He stated that NDC and other major stakeholders must demonstrate their commitment and what alternative they are putting on the table to salvage the nation from the current situation.

    “The Christian Council, all the major stakeholders you know this is not a time where you can leave governance to a few people, no, this is a time where we all come on board. Bring the best ideas and best alternatives on the table for our common good. If Parliament could tell us that they themselves have no deeper understanding of this Debt Exchange what prevents them from asking the Finance Minister to come and brief Parliament comprehensively? The situation, the steps, and all of that.”

  • DDEP: Delays as investors await the revised and final exchange memorandum

    DDEP: Delays as investors await the revised and final exchange memorandum

    On February 2, 2023, as required by the Finance Ministry’s press release from January 31st, the government failed to present a revised prospectus for the domestic debt exchange.

    By Thursday, February 02, 2023, it was planned to publish a revised and final exchange memorandum.

    The new prospectus is still not available as investors wait for the updated document to be reviewed; nevertheless, the weekend will only be here in a few hours.

    The final postponement of the entry deadline expires on February 7th, 2023.

    Ghana’s Finance Ministry is making earnest moves to push towards the 80% creditor participation rate in the Domestic Debt Exchange Program to guarantee maximum debt relief.

  • Debt exchange: Visually impaired man narrates haircut experience with Data Bank

    Debt exchange: Visually impaired man narrates haircut experience with Data Bank

    A visually impaired supporter of the New Patriotic Party (NPP), has said that he is unable to retrieve his GHc50,000 investment with Data Bank as a result of government’s ongoing Domestic Debt Exchange Program.

    Speaking in an interview on Akoma FM, Agya Bray, who sells medical products, said that he went to the bank to withdraw his investment, which had matured, only to be told that there were no funds available.

    He added that the bank told him that if he insists on getting his money back, he will have to lose GHc16,000 of his investment.

    “I did not invest in a government bond. In 2007, I invested ¢500,000,000 (GHc50,000) in products of Ofori-Atta’s Bank (Data Bank), called the M-Fund and F-Fund. I went there for my money this past Tuesday, and they said that they don’t have any money for me.

    “They told me that they can’t give me any money, and they were saying some things about haircuts and the IMF bailout the government was seeking. And I asked them why the government should be using my money to borrow from the IMF.

    “Then they told me that if I wanted my money, they would let someone pay me, but I am going to lose ¢160,000,000 (GH¢16,000),” he said in Twi.

    The NPP supporter said that he has always voted for the party, but if people like him lose their money due to the government’s debt exchange programme, they will abstain from voting in the upcoming 2024 elections.

  • Financial services sector will band together to oppose debt exchange – CIIG President

    Financial services sector will band together to oppose debt exchange – CIIG President

    The domestic debt exchange program (DDEP) has prompted a call for unity from the financial services sector since unfavorable terms will have a lasting impact on every facet of the sector.

    Solomon Lartey, CEO of the Africa Sureties and Insurance Advisory Company, said during his inauguration as the new president of the Chartered Insurance Institute of Ghana (CIIG) that the sector must unite to find a workable solution for (DDEP).

    He said clearly, “We are different sides of the same coin; whatever affects one side, impacts the other as well.

    According to Mr. Lartey, insurance companies would not be able to meet obligations with total liabilities of over GH¢5.96billion, adding that more than 7.5 million insurance policies would be affected if they are not exempted from the Programme.

    “Thousands of people could also lose their livelihoods. Insurance companies (life and non-life) pay over GH¢4.3million worth of claims to companies and individuals on a daily basis. This would also be lost. And these figures do not include pensions, health and securities – the picture is much worse than it seems,” he added.

    The CIIG president said it would be sad to see all the gains made to increase insurance coverage to more than 40% destroyed due to this debt exchange programme. “Insurance penetration currently stands at 1 percent, and this could get worse,” he further stated.

    Turning his attention to the banking sector, Mr. Lartey said 17 of the country’s 23 commercial banks would have their capital adequacy ratios fall below 10 percent and require a new capital injection of more than GH¢16 billion to be able to stay in business.

    “Banks losses could be as high as GH¢14.5billion, and most of them would have to downsize to keep some portfolios afloat. These would lead to a credit squeeze and high cost of credit. The trickle-down effect on Ghana’s industry and commercial activities would be dire,” he said.

    Mr. Lartey argued that the current global economic temperature demands increased vigilance on the part of financial services providers.

    Citing the 2023 Global Risk Report by the World Economic Forum – which predicted that the energy supply crisis, cost-of-living crisis, rising inflation, food supply crisis and cyberattacks on critical infrastructure would be among the top risks for 2023 with the most significant potential impact on a global scale – the practitioners said that there is no easy escape route.

    “This is evidenced in the current economic crisis faced by Ghana: namely high inflation at 54.1 percent; depreciation of the cedi; high fuel prices; rising food inflation; a high national debt necessitating another visit to the IMF; and the current debt exchange programme,” he said.

    The CIIG is the mother-body of all insurance professionals in the country, which brings together practitioners from life and general insurance, and reinsurance, health insurance companies, broking firms, pensions, securities and trustee firms. Mr. Lartey is the CIIG’s 9th president. He took over from Mr. Tawiah Ben-Ahmed, CEO-Sanlam Life Ghana.

  • Poorer people will be deprived if rural banks are included in DDEP – IEA to the government

    Poorer people will be deprived if rural banks are included in DDEP – IEA to the government

    The Institute of Economic Affairs (IEA) has asked the government to keep individual bondholders, rural banks, and pension funds out of the Domestic Debt Exchange Program (DDEP).

    Dr. John Kwakye, the Institute’s Director of Research, asserts that given their financial weakness, which would be impacted by the debt restructuring effort, the move is essential.

    On January 24, 2023, Dr. Kwakye told media at a discussion held in Accra that contributions from rural banks are largely for the underprivileged and that their inclusion in the DDEP would rob them of their hard-earned money.

    “Rural banks again? Because they take monies from poor people and invest in government bonds, why will you seize their monies? If there is anything at all, deal with the commercial banks,” the IEA Director stressed.

    Touching on the three-year moratorium on repayment of principal under the DDEP, Dr Kwakye described the move as regressive and therefore wants government to rather implement a new coupon of 8-12% over the new maturity period.

    “They need to adopt a new coupon regime of 8-12 percent over the new maturity period and also consider abolishing the 3-year moratorium on the repayment of principal to save individuals and banks”, he added.

    He, however, advised that for any debt restructuring to be successful, it must safeguard the stability and integrity of the financial system.

    He added that it must also be designed to prevent capital flight and increase in the cost of borrowing among others.

    “There must be proper stress-test exercise at the institution-by-institution level to study the impact of different DDE proposals on financial sector viability and stability and it must not impair government ability to fund itself on an on-going basis,” Dr. Kwakye outlined.

  • Domestic Debt Exchange: Victims shouldn’t Suffer – Consultant

    Domestic Debt Exchange: Victims shouldn’t Suffer – Consultant

    According to a banking consultant, Ghana’s effort to implement a Domestic Debt Exchange Program (DDEP) needs to be carefully planned in order to protect the weaker members of society.

    To restructure domestic debt is to operate.
    The financial consultant Reverend Edward Randolph-Koranteng said, “You only do it if you have to, and you avoid it if it might do more harm than good.

    He pointed out that some banks were among the society’s most susceptible because of the fundamental conceptual underpinnings of the International Financial Reporting standards (IFRS).

    Reverend Edward Randolph-Koranteng, who is also the Board Chairman of the Ghana India Trade Advisory Chamber, in an interview with the Ghana News Agency (GNA) encouraged the government to thoroughly research into the subject.

    That, he said, should be followed with broader consultations with industry players and financial institutions to avert any political suicide.

    He explained that political suicide was a concept by which a politician or political party loses widespread support and confidence from the voting public by proposing actions that are seen as unfavourable or that might threaten the status quo.

    Rev. Randolph-Koranteng said the government should not play the ostrich and overlook the concerns of the public to have a pyrrhic victory as such victories only inflicted devastating toll on the victor and was tantamount to defeat,

    “Such a score of victory negates any true sense of achievement or damages long-term progress.

    The Banking Consultant noted the need to have a bipartisan approach to handling this precarious situation regarding the DDEP through extensive stakeholder engagement to get everyone’s buy-in before implementation.

    Any further politicization of the DDEP irrespective of the political divide could lead to a catastrophic result and any political party with foresight would have to avoid a pyrrhic victory, where you kill a mosquito with a sledgehammer on your forehead.

    “You don’t want to win power to become worse off”, he added.

    The Banking Consultant said though it might appear that the DDEP was necessary in the present circumstances, it must be packaged in a way that would not hurt society.

    He said: “Economics cannot be devoid of politics but if we overpoliticise our economy and fail to look at the realities in the national interest, it could be more fatal than we can imagine.

    “…The government must work at gaining trust, the second most important factor consumers consider when buying financial products.”

    The Ghana India Trade Advisory Chamber Board Chairman also advised Ghanaians to demonstrate love for country and radically increase productivity at all levels of economy with a changed mindset.

    “We need to boost our exports…Until we practically work on our weak economic fundamentals, no government can save us from the cyclical economic mess and depreciation of the Ghana Cedi and IMF cannot ware our pampers for us as a nation which is over 60 years,” he explained

    Turning attention to the IMF bailout, he said the USD 3billion injection by IMF would only be a temporary support to keep the economy alive.

    “This would give us room to do the needful adding,” the consultant said, adding, “these monies are not a cure to our economic issues, you do not borrow to consume as we have done since independence, but you borrow to invest.

    ” For instance, if part of the monies borrowed had been utilized to set up factories to process the country’s raw materials example bauxite, revive most defunct factories or rehabilitate Tema Oil Refinery, the country should have been able to sustain its debt.

    He also called for a well thought through national vision for domestication and consuming what was locally grown to decrease reliance on foreign goods and excessive pressure on the Ghana Cedi.

  • Government and bankers gain a significant understanding (DDEP)

    Government and bankers gain a significant understanding (DDEP)

    Regarding the conditions of banks’ participation in the Domestic Debt Exchange Program, the Ghana Association of Banks (GAB) and the government have come to a significant agreement (DDEP).

    With the addition of a 5 percent coupon for 2023 and a single coupon rate for each of the 12 new bonds, this agreement enhances the DDEP, resulting in an effective coupon rate of 9 percent.

    The agreement further clarifies the terms of access to the Ghana Financial Stability Fund (GFSF) and the operational framework, and it deletes or modifies provisions in the Exchange Memorandum that allow the state to alter the Exchange’s terms at its own discretion.

    “We are pleased to have reached this agreement with the government of Ghana. It is a significant milestone toward addressing our economic challenges and will help restore macro-economic stability and accelerate Ghana’s economic growth,” Chief Executive of GAB, John Awuah, indicated in a joint statement on the matter.

    The GAB notes that participation of its member-banks in the DDEP, per the new terms, is subject to each individual bank’s internal governance and approval processes – but in any case, not later than January 30, 2023.

    “This is a major step forward in our efforts to conclude the DDEP in time with all other stakeholders. We are committed to working closely with the GAB and other stakeholders to ensure the success of this programme,” the Ministry of Finance stated.

    In December 2022, the Ghanaian government offered bondholders an opportunity to exchange about GH¢137.3billion worth of domestic bonds for a package of 12 new bonds with maturities ranging from 2027 to 2038, and coupon rates ranging from 0 percent to 10.65 percent. The exchange was voluntary and bondholders had until January 2023 to participate.

    Impact of DDEP on banks

    Unsurprisingly, a study analysing the impact of Ghana’s debt exchange on the financial and real sectors of the economy indicates that the banking sector will suffer the most losses, at just under 60 percent.

    The report also emphasised that sovereign debt restructuring weakens domestic investors’ balance sheets, causing a contraction of credit and a fall in output. This is particularly concerning as the larger the exposure to domestic debt, the stronger the negative impact on the economy.

    Sovereign debt restructuring is expected to weaken domestic investor’s balance sheets causing a contraction of credit and a fall in output due to the larger exposure to domestic debt. With overall NPV estimated losses of 58 percent, banking sector losses amounted to GH¢67.88billion – a major factor for determining the banks’ capital needs.

    The debt exchange programme has raised concerns among analysts and economists about potential long-term effects on the economy. It is feared that the high losses for local bondholders could lead to a reduction in investment, which in turn would negatively impact economic growth and development.

  • DDEP: A sick retiree of 77 promises to spend the night at the GCB Bank over a bond refund

    DDEP: A sick retiree of 77 promises to spend the night at the GCB Bank over a bond refund

    A 77-year-old retiree named Peter Kojo Nyansepe has declared he won’t leave the bank’s property until he receives the interest due on his bonds at the end of the month.

    The sick bondholder told JoyNews that he depends on the bond returns and that if he doesn’t get anything at the end of the month, he won’t have anything to live on.

    He claims that because he is concerned about how he will pay for his meds and other daily expenses, the uncertainties surrounding the Domestic Debt Exchange Program fill him with fear and anxiety.

    He explained that he decided to invest in government bonds after he fell victim to ponzi scheme.

    “I gave the money to the Ghana Commercial Bank so they’ll give me the money before I come. I’m going to stay there.

    “If they say the money is not there, I’m going to stay there. I’m going to stay there until they carry me wherever they want to carry me because I cannot walk myself so they’ll carry me.

    “Wherever they want to carry me they have to carry me and go. That’s the only thing I can do. I cannot fight them also”, he said.

    Peter Kojo Nyansepe is one of many retirees watching on with anxiety as the Ministry of Finance rolls out the DDEP.

    As part of conditionalities to achieve the IMF bailout, the government has recommended that all benefit due bondholders in 2023 not be paid.

    Per the arrangement, the payment of the benefits will resume in 2024 at the rate of 5%.

    This arrangement has been widely criticized with critics saying that the government is worsening the situation of the already burdened Ghanaians.

  • Losses from the Debt Exchange Program Must Be Reported, – ICAG

    Losses from the Debt Exchange Program Must Be Reported, – ICAG

    The proposed Domestic Debt Exchange Program has been criticized by the Institute of Chartered Accountants, Ghana (ICAG), which has urged the government to be ready to account for losses (DDEP).

    “ICAG has already submitted comments, some of which are geared toward the fact that the debt restructuring will undoubtedly have implications for financial reporting. What we stand by is that International Financial Reporting Standards are to be complied with, because there will be losses that need to be accounted for.
    Sena Dake, the president of the Institute, stated that they must be acknowledged in the financial statements.

    She said this at the 40th graduation ceremony of the Institute in Accra, and noted that if best accounting practices are adhered to in the DDEP this will restore investor confidence.

    She meanwhile added that it is high time the knowledge-based organisations like ICAG came together to contribute toward getting the economy back on the path of growth.

    “ICAG stands for the people, prosperity and sustainable development, which are best enabled by peace, justice and strong institutions. It has become very important that accountants and other key stakeholders collaborate in the nation’s socio-economic development and contribute to government’s decision-making process,” she noted.

    While addressing the graduates, she stated that: “It is time we paid attention to and recognised the key roles that professional accountants play in creating, verifying and giving assurance on high-quality sustainable information as enablers and trusted advisors. As we attempt to navigate out of these trying times, it is especially important for professionals like us to serve as strong watchdogs.

    “We must speak up against any administrative attempts to spend outside our limits; we must push back and strongly advise against any attempts to make decisions that will not be in the best interests of the public and posterity. Most importantly, our work must advance sustainability, support sound public financial management, resist regulatory fragmentation and embrace global collaboration.”

  • New bonds under domestic debt exchange programme potentially worthless – Senyo Hosi

    New bonds under domestic debt exchange programme potentially worthless – Senyo Hosi

    Convenor of the Ghana Individual Bondholders Forum, Senyo Hosi, has rebuffed claims that the rejection of the domestic debt exchange programme by individual bondholders would bring untold economic hardship to the country and would potentially make their bonds worthless.

    According to him, data available from the Finance Ministry demonstrates that such claims are false and merely meant to create a state of fear and panic to get bondholders to sign unto the ongoing debt exchange programme.

    Speaking on JoyNews’ PM Express, he explained that signing onto the debt exchange programme would rather make ones bonds potentially worthless and irredeemable.

    “Please anybody who tells you [that] is a liar, is uneducated, has no skills, is not worth any attention if you’re an individual bondholder. 1+1 can’t be 3. It can’t be one and half. It’s not Senyo, this one is just math, it’s science, it’s finance, it’s economics and again it’s common sense,” he retorted.

    His comments follow a solemn plea from NPP stalwart, Gabby Otchere-Darko on Sunday who said that even though the terms of the debt exchange programme will affect individual bondholders, it is a necessary step which must be taken to salvage the economy.

    “Ghana is in a very difficult place. What we are seeing with the mobilisation of agitation on individual bondholders poses a real and serious risk worse than what we witnessed when opposition to E-Levy succeeded in derailing an already shaky macroeconomic situation from 2021,” his tweet read.

    “If the no-compromise opposition to it wins, what then has been achieved? It may lead to national debt default.

    “So what then happens to the value of your bonds after! Potentially worthless. If participation is low, we jeopardize resolving the economic crisis and hardships,” he added.

    However, explaining the risk of signing onto the government’s new bonds under the debt exchange programme, Senyo Hosi noted that bondholders were much safer holding on to their current bonds rather than discarding them for the new ones.

    He said, “with bonds right now your investment is retained because that’s your expectation. You went in for 16%, you’re getting your 16%, no problem. Secondly if you take an ESLA or you take a Daakye bond, the source of the revenue is secured.

    “The ESLA is even governed by British law, English law; it’s not even governed by Ghana law. Anytime you buy petrol, the money to pay your ESLA flows in. You’re already taxed to pay off the bond.”

    He further explained that while bondholders who are yet to sign discard their old bonds for the new bonds have the right to sue government and receive reparations from the state should the government default on payment, under the debt exchange programme, the government is granted immunity.

    So while you can sue government, it will merely be considered an academic exercise as no reparations will be received.

    “Then you have in these current bonds GoG, Government of Ghana has no immunity. So your rights are fully enforceable. If government refuses to pay, you can sue them and suing them is not just enough because it can also be an academic exercise. What’s most important is its enforceability where you can actually now attach an asset. You can execute your judgement.

    “Under you current bond framework you can do that, under the new one you can’t do that. You can sue them but they’re making you waive your right and granting them immunity against you attaching any asset of government that is for a public purpose. Tell me which asset of government is not for a public purpose. Which asset of government is for private purpose? Then you’re a thief,” he said.

    He noted that government coercing bondholders to waive their rights to execute judgment against them in case of default under the debt exchange programme significantly renders the new bonds worthless as successive governments could at will restructure debt repayments without consequence.

    “So you could lose up to 70% of your investment and it could be more if you really look at the real value of your money,” he said.

    Source: Myjoyonline

  • Government extends Debt Exchange Program deadline to January 31

    Government extends Debt Exchange Program deadline to January 31

    The domestic debt exchange program’s (DDEP) expiration date has been postponed by the government to January 31, 2023.

    Since the program’s debut on December 5, 2022, there have been three extensions.

    The Ministry of Finance explained that the delay was necessary owing to ongoing stakeholder discussions with institutional and individual investors who have recently been asked to participate in the debt exchange program in a tweet seen by GhanaWeb Business.

    According to a tweet from the office of the finance minister, “creating consensus is essential to a successful economic recovery for Ghana.”

    As part of efforts to secure an IMF bailout and address the country’s unsustainable debt situation, government launched the DDEP inviting bondholders to voluntarily exchange approximately GH¢137 billion domestic notes and bonds of the Republic including ESLA and Daakye for a package of new bonds.

    In the wake of this, various groups of bondholders in the financial sector have called on their members to reject government’s Domestic Debt Exchange Programme due to a lack of broader consultations and negotiations.

  • Labor unions applaud the Council of State

    Dr. Anthony Yaw Baah, Secretary of the Trades Union Congress, has thanked the Council of State for its role in helping the government and organized labor reach a good accord.

    On December 22, 2022, in Accra, at a ceremony where a memorandum of understanding was signed between the government and organized labor regarding the exclusion of pension funds from the Domestic Debt Exchange program, Dr. Baah, who represented organized labor, thanked President Akufo-Addo and his administration for paying attention to the country’s workers’ plight.

    In his speech, Dr. Baah expressed his sincere gratitude to the Council of State for its contribution towards the exemption of pension funds.

    In addressing the media, he acknowledged the role played by the Council of State under the leadership of Nana Otuo Siriboe II.

    He stated that the Chairman of the Council of State personally worked tirelessly by engaging both government and Labour to ensure that there was peace in the country.

    He explained that the organised labour had no intention of causing destruction, but they believe that pension funds should not be touched. He rather stated that if anything, pensions should be improved in the country.

    The statement by Dr. Baah on the impact of the Council of State in the exemption of pension funds from the domestic debt exchange programme has come at a time when the Council has been under serious criticism for its relevance and there has been calls for the scrapping of the or replacing of the Council of State with the senate system which others believe will be more effective.

    The current Council of State has been working tirelessly in line with its mandate as stipulated by chapter 9 of the 1992 Constitution. It has had several engagements with the government and other stakeholders especially during these financial crises on the way forward.

    The Council has had series of meetings with the Finance Ministry, the Bank of Ghana and other stakeholders in the trade and industry sector on measures to improve the strength of the cedi to other major foreign currencies. Possibly, the current appreciation of the cedi against major foreign currencies could be some of the outcomes of the Council’s work.

    It must be noted that the Council of State is unable to make known most of its work to public as a result of provisions of the constitution which limits the public activities of the Council of State.

  • Domestic Debt Exchange: Government delays expiration and modifies terms

    The domestic debt exchange program’s parameters have been modified by the Ghanaian government, who have also delayed the program’s expiration from this year’s end to early next.

    The government today announces its decision to extend the expiration date of the invitation from Friday, December 30, 2022, at 4 p.m. (GMT) to Monday, January 16, 2023, at 4 p.m., according to a press release from the ministry of finance dated Saturday, December 24, 2022.

    “The Settlement Date for the Invitation is now expected to occur on Tuesday, January 24, 2023, or as soon as practicable thereafter, but no later than the Longstop Date which is now scheduled for Tuesday, January 31, 2023, unless further extended by the government under the Invitation”, the ministry added.

    “The Announcement Date is now expected to occur on or about January 17, 2023,” the statement further announced.

    Also, the government has modified the terms of the programme as follows:

    Offering accrued and unpaid interest on Eligible Bonds, and a cash tender fee payment to holders of Eligible Bonds maturing in 2023;

    Increasing the New Bonds offered by adding eight new instruments to the composition of the New Bonds, for a total of 12 New Bonds, one maturing each year starting January 2027 and ending January 2038;

    Modifying the Exchange Consideration Ratios for each New Bond. The Exchange Consideration Ratio applicable to Eligible Bonds maturing in 2023 will be different than for other Eligible Bonds;

    Setting a non-binding target minimum level of overall participation of 80% of the aggregate principal amount outstanding of Eligible Bonds; and

    Expanding the type of investors that can participate in the Exchange to now include Individual Investors.

    “These modifications will be set forth fully in an Amended and Restated Exchange Memorandum which is expected to be published during the week of 26th December 2022. Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the Amended and Restated Exchange Memorandum,” the ministry noted.

    The government launched the programme on December 5, 2022.

    Accordingly, the government invited holders of approximately ¢137.3 billion of the principal amount outstanding of some of Ghana’s domestic notes and bonds issued by the Government, E.S.L.A. Plc or Daakye Trust Plc to exchange their Eligible Bonds for a package of new bonds to be issued by the government.

    The government then extended the expiration date to Friday, December 30, 2022, and the settlement date to Friday, January 6, 2023.

    Per the memorandum, the government “reserves the right, in its sole discretion, to extend the timetable for the Invitation at any time and to make amendments to the Invitation at any time”.

    “Any Eligible Holders whose Eligible Bonds are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominees must contact such entity if it wishes to participate in the Invitation, as such entities may establish an earlier deadline to receive instructions to tender Eligible Bonds,” the Finance Ministry said.

    It noted at the time: “In making this decision to extend and the modifications described herein, the Government considered feedback from the financial sector about the need to secure internal approvals”.

    “Further, this extension affords the Government of Ghana the opportunity to consider suggestions made by all stakeholders with the aim of adjusting certain measures acceptable within the constraints of the Government’s Debt Sustainability Analysis.”

  • Domestic Debt Exchange Program’s expiration date postponed

    The Ministry of Finance has extended the Domestic Debt Exchange Program (DDEPexpiration )’s date from Monday, December 19 to December 30 of this year, with a Friday, January 6, 2023 settlement date planned.

    The ministry believes that this development will give the required time to conduct the required consultations and analyses to meet the demands of domestic and international institutional bondholders while maintaining the integrity of the Debt Sustainability Analysis and the Staff-Level Agreement (SLA).

    “Over the last 10 days, we continued the consultation efforts that we initiated with all stakeholders ahead of the launching of the offer, including regulators, bankers, pension funds, asset managers and insurance companies.

    “Complementing the efforts on the structure of the offer, we are working with the Bank of Ghana and other regulators (SEC, NPRA and NIC) in the financial sector and our advisors and including input from various institutions and the unions,” it said in a release.

    The release said the ministry also fully considered feedback from the financial sector in relation to the need to secure internal and executive board approvals which were necessary considerations for their participation in the exchange.
    “This in some instances may require emergency board meetings, etc. The extension also affords the Government of Ghana the opportunity to consider suggestions made by all stakeholders with the aim of adjusting certain measures acceptable within the constraints of the Debt Sustainability Analysis.

    “Considering these developments and taking cognisance of the festive season, we have decided to extend the expiration date of the voluntary offer to Friday, December 30, 2022, with a contemplated settlement date of Friday, January 6, 2023,” it said.

    The release further explained that the extension came on the heels of the announcement of an SLA with the IMF on December 13, 2022.

    On December 6, 2022, the domestic debt operation, formally referred to as the Invitation to Exchange, was launched.

     

    No takers

    Almost two weeks after the launch of the programme, checks have revealed that there were no takers for the offer.

    Sources said the Central Securities Depository (CSD) was waiting for the consent of institutional bondholders willing to participate in the DDEP that required them to postpone their interest in return for full payment of the principal at a later date.

    As of Monday, December 12, no investor had communicated to the CSD of its intent to participate in the historic exercise.

    Launched by the Minister of Finance, Ken Ofori-Atta, the DDEP requires institutional holders of the eligible bonds to agree in writing to the CSD to swap their current holdings for the new ones.

    Interested investors had up to 4 p.m today, December 19, to confirm their willingness to participate, according to the Minister of Finance, who said the exercise was an avenue for Ghana to bring its debts to sustainable levels to be able to qualify for financial support from the International Monetary Fund (IMF).

    The paper was also hinted by sources close to the transaction that it was possible that the banks and brokers, which interfaced for the depository and the investors, were collating the lists in bulk to be forwarded to the depository later.

    Given that the CSD does not deal with individual investors, the sources said it was not unusual for the depository to record no takers for the debt exchange programme in the early days.

    Agitations

    Since the announcement of the programme, fund managers, labour unions and pensions fund managers among others have fiercely resisted the move, citing the threat it posed to pension funds in particular.

    They also blamed the government for what they claimed to be an imposition of the programme without deep consultations to embrace their suggestions and views.

    The groups strongly held the view that their suggestions could make the programme better and more appealing to the IMF and hasten the process towards reducing the country’s debt to sustainable levels.

    It is not yet clear what the expiration of the deadline will mean for the entire government /IMF negotiation.

    Presently, the government is racing against time to secure IMF management and board approvals to unlock some $3 billion in balance of payment support.

    With the announcement of an SLA which seems to be a contributory factor to the appreciating cedi since last week, analysts are also wondering whether this can be sustained in view of the latest development.