Reports have it that some individual insurance companies have hesitated participating in government’s Domestic Debt Exchange Programme (DDEP), which is slated to end today, January 31, 2023.
It has however been confirmed that a larger association of these companies agreed to government’s revision for the sector during its meeting with them the past week.
Concerns associated with the delay reveal that much as the association agreed to the terms of the DDEP, the final decision to participate for some these individual companies rests on approval from their boards and shareholders.
Anonymous sources say the deadline for the programme was too short as the final agreement to participate in the DDEP needed to go through some extensive processes before a final decision could be made.
One of these sources indicated that the majority of insurance companies are foreign-owned and traded on stock exchanges in their respective home countries.
“Any decision for the company to participate in this DDEP must be done with the approval of shareholders.
“The companies need to call an emergency annual general meeting and table the issues for approval by the shareholders before a decision can be taken.”
Source with an anonymous identity
Those that are not listed have to go through their boards, a process which cannot take just few days to complete, the source added.
Another call for the hesitation of some individual insurance firms, the source disclosed is because despite the association’s agreement to the amended terms of the programme, there was a caveat just as agreed with the banks that “participation in the DDEP is absolutely voluntary”.
Meanwhile, it is clear that the government is racing against time to draw curtains on the deal by close of today, January 31, 2023 after its extension of the exercise on a couple of occasions to allow for broader consultations with stakeholders.
It is not yet clear with the latest developments whether the Ministry of Finance on government’s stead will proceed with implementation of the DDEP.
As it stands now, three groups have signed onto the deal in principle. They are: the Ghana Association of Bankers (GAB), Ghana Insurers Association (GIA) and the Ghana Securities Industry Association (GSIA).
The deadline may be further extended
Joe Jackson, Director of Operations at Dalex Finance, is confident of another extension of the deadline to the domestic debt exchange programme to make room for some finalized terms with subscribers of the programme.
Stakeholders are awaiting the government’s next move, considering recent agreements with individual bondholders as well as the banking and insurance sectors.
“Even though the deadline is [today], those who have to make a decision do not have the terms to finalize. So it will come out [today]. If it does, it leaves pretty little time for final examination. The devil is always in the detail. I really do think that, the deadline may be extended by a few days.”
Joe Jackson
Although the situation ahead appears dicey for government, Joe believes individual bondholders are very likely to be exempted from the debt exchange.
“Government has more than enough to go without the individual bondholders. It took the decision and found a diplomatic way of excluding the individual bondholders by saying that it would like them to sign on but if they don’t, it will not default.
“The government has to be realistic and take the hard decision to reduce expenditure as we have advocated, but it is going to be a tough one.”
Joe Jackson
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