Executive Secretary of the Civil and Local Government Staff Association of Ghana (CLOGSAG), Isaac Bampoe Addo, has alleged that some corporate trustees took advantage of the Debt Exchange Programme because they had prior knowledge.

According to him, these trustees, per their prior knowledge of the programme, converted their domestic bond holdings into foreign assets. He indicated they also transformed their bond holdings into cash to escape the government’s haircut.

“… Some Corporate Trustees had prior knowledge of the domestic debt exchange programme and were able to convert their domestic bond holdings into either foreign assets or foreign currency or change the corporate holdings into individual holdings. They also changed their bond holdings into cash.”
Isaac Bampoe Addo

As a result of the prior knowledge these trustees had, Mr Bampoe Addo therefore expressed the need for the National Pension Regulatory Authority (NPRA) to investigate the allegations.

“These concerns should not be left unattended to. We call on the National Pension Regulatory Authority to investigate this matter with regard to its investment and NPRA guidelines.”
Isaac Bampoe Addo

The CLOGSAG Executive secretary explained that in spite of government’s exemption of the pension funds from the programme, his members will embark on a nationwide strike “should government fail to honor any of our coupons when they fall due”.

“Surprisingly, the government chose domestic debt exchange as an answer to its inability to service the domestic debt when it could have curtailed its flagship programmes that would have gone a long way to exhibit willingness on the part of government.”
Isaac Bampoe Addo

Meanwhile, the Minister of Finance, Ken Ofori-Atta, has admitted that government’s decision to exempt pension funds from the Domestic Debt Exchange Programme will have dire consequences on the programme and the country’s economy.

Addressing the media after signing a memorandum of understanding between government and organised labour, Mr Ofori Atta emphasized that the exemption of pension funds from the Domestic Debt Exchange Programme comes at a very serious cost.

Impact of exempting pension funds from debt exchange programme

Elsewhere, the Director of Operations at Dalex Finance, Joe Jackson, indicated that the debt restructuring programme will not bode well for the country if an immediate alternative is not found to replace the pension fund which has been exempted. He opined that there is no local option to replace the pension funds, but the government can turn to the external bondholders for help.

Mr Jackson highlighted that “the hole” must now be transferred, possibly, to the external front by negotiating harder or offering a severer cut or reductions. However, he noted that it will be virtually impossible to “see how they can transfer this to another local constituency”.

The Director of Operations at Dalex Finance stated that government may transfer its attention to the foreign debt holders and if that fails then Ghana is in trouble.

It will be recalled that Government announced an exemption of all pension funds from the debt exchange programme after a memorandum of understanding with Organized Labour. Organized Labour, prior to the announcement, agitated over fears of haircuts on the pension funds of their members.

Organized Labour threatened to go on an industrial action if government failed to exempt pension funds from its debt exchange. It noted that the exemption of pension funds from the exchange is non-negotiable.

In reacting to this, Government after a meeting with Organized Labour, formed a seven-member committee to explore technical solutions to bring the debt threshold back to sustainable limits. The Committee comprised four representatives from Government and three representatives from Organized Labour. They are expected to submit a report on December 28.