The Finance Minister, Ken Ofori-Atta, has disclosed government’s decision to grant some concessions to Individual Bond holders under the Domestic Debt Exchange Programme (DDEP).
According to the Finance Minister, any move by some associations and institutions to totally abolish the program or be granted total exemption in the case of individual bondholders is ruled out.
“We are looking at a situation where maybe the zero coupon for bondholders in 2023 should be changed going forward.”
Ken Ofori-Atta
This comes in the wake of agitations from individual bondholders demanding exclusion from the government’s domestic debt exchange program.
Ghana’s Individual Bondholders fear that the modality, which is an important step in securing the International Monetary Fund (IMF) bailout, may bring untold economic hardship to the country and would potentially make their bonds worthless.
But the crucial nature of the situation, according to the Minister, presents the need to ensure a balance between keeping the nation afloat and ensuring the protection of the citizens’ livelihood.
Mr. Ofori-Atta noted that government is fully committed to taking measures that will lessen the burden on individual bondholders who have expressed worry about the current structure of the Domestic Debt Exchange Programme.
Despite putting across government’s commitment in reviewing its decision to deal with some of the concerns of bondholders, Ken Ofori-Atta argued that there should be the need for some burden sharing under the programme.
“No individual bondholder can be totally exempted. We have a situation where our debt exchange is necessary. We have a situation where we have come out of certain formulations and we have gone ahead to discuss with the financial institutions on the way to mitigate that.
“I think we have done that successfully. Debt Exchange Programme is needed now to help stabilize the economy and help the country secure an IMF Programme before the end of the first quarter of 2023.”
Ken Ofori-Atta
There has been a rejection of the programme by banks, insurance firms, pensioners and individual bondholders. “Maybe, a lot more groups should have been brought on board at the initial stages before the initiative was finally rolled out,” he conceded.
Alternatives To DDEP
Answering questions in relation to any alternative measures being put in place to substitute the DDEP, Mr. Ofori-Atta maintained that such a proposal cannot be feasible.
“Looking currently at Ghana’s debt levels, everything must be done to bring it to sustainable levels in the short to medium term.
“In the same way we sat with the Union pensions, and I think we are making great progress in what we do for them. In the same way in which we are looking at individual bondholders to see how we can tweak this.”
Ken Ofori-Atta
According to him, a lot of measures have been initiated by government since last year to reduce the debt with respect to ‘expenditure to GDP [Gross Domestic Product] Ratio’. “The rigidity of Ghana’s budget often makes it difficult for these proposed cuts to bring out the needed impact,” he added.
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