Minister of Finance Ken Ofori-Atta has offered a welcome assurance that the government has exempted all pensioners who didn’t participate in the Domestic Debt Exchange programme (DDEP).
He stated that all pensioners who failed to tender their old bonds for new ones will be exempted from the DDEP and therefore their coupon payment and maturing principals would be honoured in line with government’s fiscal commitment.
The government, he said, is committed to the well-being and dignity of pensioners and was a great distress to have seen them picket at the premises of the Ministry of Finance.
Mr. Ken Ofori-Atta disclosed this when he addressed Parliament on Thursday 16th February, 2023 on the Domestic Debt Exchange Programme.
According to him, the government is mindful of the ramifications of the Domestic Debt Exchange Programme (DDEP) on the country’s financial health and is therefore developing prudential measures to mitigate the potential impact on domestic creditors considering the need to preserve financial stability.
He stated that billions of taxpayer’s monies were used between 2017 and 2019 to rescue the financial sector and stressed that government has no intention to risk that work and is therefore determined to protect banks operating in Ghana and strengthen their capacity to finance the economic recovery and growth.
Mr. Ken Ofori-Atta disclosed that government launched the DDEP to restructure a total outstanding debt (Eligible and non-Eligible Holders) amounting to approximately GH¢137 billion worth of government bonds and notes.
He indicated that subsequent extensions of dates and payment of maturities meant that the remaining stock was reduced from GH¢137 billion to Ghe130 billion.
According to him, the Eligible Bonds as per the Exchange Memorandum meant an exclusion of Pension Funds and Bonds that were subject to swap mechanisms for monetary and exchange rate policy operations, which brought the eligible bonds for tendering to GH¢97,749,624,691.
He assured that out of these eligible bonds for tendering, GH¢82,994,510,128 was successfully tendered, which accounted for about 85% of outstanding eligible amounts and met the target of 80% as expressed in the Memorandum of Exchange.
“Government is mindful that the GH¢82,994,510,128 bonds that were successfully tendered represent 64% of the outstanding debt stock of GH¢130 billion at the end of December, 2022,” he said.
The Finance Minister stressed that participation in the programme has always been voluntary and intended to alleviate the country’s debt burden and minimize its impact on investors and the financial sector.
The Minister indicated that Ghana has officially requested its bilateral creditors for a Debt Treatment initiative under the G20 Common framework and has started the process of negotiating in good faith with its commercial creditors.
Two preliminary discussions and exchange of information, he said, have started on a good footing with representative committees and advisors and assured that the members have indicated their commitment to establishing a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework by end of February 2023.
According to him, the significant milestone achieved by the government in the DDEP will build momentum for the external restructuring programme expected to commence soon.
“We hope our commercial creditors will understand our desire to negotiate with our bilateral creditor’s softer terms than the ones we anticipate to propose to them, as a speedy process with the bilateral creditors is needed to pave the way for the discussions with private creditors.”
“Mr. Speaker, we have also initiated discussions with the representatives of our international bondholders and their Advisors and substantive discussions are due to start with them in the weeks to come.”
Government, he said, recognizes the continued importance of the DDEP in closing the financing gap and enabling the government to meet the debt sustainability target of 55% of debt-to-GDP in present value terms by 2028.
Contributing to the Finance Minister’s statement, Hon. Isaac Adongo, MP for Bolgatanga Central lamented the risk the NPP government has introduced in the purchase of government bonds.
He stressed there should be consequences for the mismanagement of the Ghanaian economy and stressed the situation should be properly investigated and those found culpable held accountable.
Member for Obuasi West and Ranking Member of the Finance Committee in his contribution argued debate on the DDEP should focus on how to restructure the Ghanaian economy.
According to him, the problem is not just about debt but the fundamental structure of Ghana’s economy needs to be changed.
He urged the government to be more radical in its revenue mobilization driver and also stop distributing wealth that has not been created.
