Former Chairman of Parliament’s Finance Committee, Dr Mark Assibey Yeboah, has stated that government’s proposed debt exchange programme is too soft.
Dr Assibey Yeboah noted that the programme is not deep enough considering the economic situation the country finds itself.
The former New Juaben South lawmaker, however, commended the Akuffo Addo led government for the move in ensuring that the country’s economy becomes stable. To him, it is the first step to finding solutions to the current economic crisis.
“I will even say that the exercise has not been deep enough because from what we are hearing, individual bondholders are excluded, and there are no haircuts on the principal as it were and there have been some concessions if you like, so I think this is the softer way to go.”
Dr Assibey Yeboah
According to him, the IMF Programme is dependent on this debt restructuring. “So before we can sign up for the programme, we need to restructure our debt. Our debt has become unsustainable; in simple terms, we simply cannot repay our debts, and we have to do something about it,” he noted.
“The Government has admitted that the only way out of the economic mess is for us to sign up for an IMF programme and this has become a prerequisite for signing up for the programme and so if we don’t restructure our debt, we cannot have the programme in place.”
Dr Assibey Yeboah
Local Currency Likely To Strengthen Against Dollar In The Middle Of debt Sustainability
The Ghana cedi is likely to strengthen against the US dollar and other major foreign currencies amidst clarity on Ghana’s debt sustainability outlook.
Government on December 5, 2022, defined the parameters of Ghana’s debt exchange programme. The local currency subsequently continued to improve despite the rating downgrade by Moody’s last week.
These measures include some exemptions and external debt restructuring parameters that will be implemented. Per the release by the Finance Minister, treasury bills and individual bondholders will not be affected by this exercise. However, domestic bondholders will be compelled to exchange their instruments for new ones.
The Minister of Finance, Hon Ken Ofori, at a press conference clarified the debt exchange programme, which included consolidating all existing bonds into four bonds and extending all bonds as of December 1, 2022 to now mature in 2027, 2029, 2032, 2037. Coupon payments associated with this debt exchange programme are 0% in 2023, 5% in 2024 and 10% from 2025 till maturity.
These details improved the sentiments around the cedi, appreciating slightly ostensibly due to Ghana’s favorably debt sustainability outlook. The Cedi is currently selling at Ghc13.
“Negative feelings around a possible drop in yields pushed the USD to fall against a basket of currencies on Thursday. Against these backdrops, we expect the Ghana cedi to continue strengthening this week”, Databank Research revealed in its weekly market update.
The local currency had remained relatively stable, particularly to the dollar in recent times. It saw a week-on-week appreciation of 3.12% against the dollar, 0.88% to the pound and 3.79% versus the euro on the retail market.
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