Finance minister, Ken Ofori-Atta, has revealed that government’s debt exchange program will provide an orderly way to put the country’s economy back on track.
According to him, the objective of the program is to alleviate the debt burden in the most transparent, efficient and expedited manner, via the medium of an exchange offer. He indicated that government has been working hard to minimize the impact of domestic debt exchange on investors holding government bonds.
“This debt exchange provides an orderly way to put our economy back on track. These efforts will be complemented by fiscal measures to protect the neediest and most vulnerable in society. The government expects overwhelming support to this exchange and in truth, the success of this necessary endeavor depends of course upon the public’s cooperation… We are all in this together and we intend to get out of this together.”
Ken Ofori-Atta
Speaking at the launch of Ghana’s domestic debt exchange program, today, December 5, 2022, Mr Ofori-Atta called on the media to support government’s exchange program by disseminating the right information to economic actors. He noted that government anticipates “inflation will be returned to single digits”, ensuring that return on these new bonds will be protected. With this, he pledged government’s commitment to take corporate measures to safeguard the solvency of the financial institutions involved in the exchange.
“Thanks to well-targeted regulatory measures and decoration of a financial stability fund, banks, pension funds, insurance companies, fund managers and collective investment schemes will be supported to ensure they are able to meet their obligation to their clients as they fall due. For this reason, the Governor of the Bank of Ghana will follow suit with details of assistance in due course…”
Ken Ofori-Atta
Impact of debt exchange programme
The finance minister stated that an alternative to the exchange programme will be a far worse economic crisis with protracted closure from international markets including imported goods and services. This, he explained, would be compounded by “domestic economic instability both for the real economy” and the financial sector.
“It would also mean depleted fiscal resources to support the neediest.”
Ken Ofori-Atta
Mr Ofori-Atta highlighted that Ghana is not the first nation to undertake the domestic debt exchange program. He revealed Jamaica resorted to the program in 2010 and 2013.
In such instance, the finance minister recounted that the country chose the “sense of responsibility of the Jamaican people and proceeded through a voluntary” approach.
“The approach was highly successful as more than 99% of holders of domestic bonds participated in the exchange. On the contrary, in the case of Greece, the authority chose to undertake a coercive approach whereby a law was passed to force people into participating.”
Ken Ofori-Atta
Mr Ofori-Atta opined that government intends to avoid as much as possible the Greece approach to debt exchange program as it strives to reach a consensual solution of bond holders, which really is the Ghanaian way. Nonetheless, he opined that domestic debt exchange has yielded positive results both in Greece and Jamaica and many others and will certainly put the Ghanaian economy on a much stronger footing.
“Thankfully, today, our development is at a far more advanced stage than before when other challenges confronted us. We have made big progress over the years and the progress before us is even greater. This is another challenge we must surely overcome…”
Ken Ofori-Atta
The ultimate goal of the country, Mr Ofori-Atta stated, is to put the nation onto a sustainable development path, one of fiscal responsibility and rectitude, economic stability and growth. He emphasized that this will truly translate into improving the lives of people and all the nation’s economic actors including investors.
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