The Government of Ghana has settled on its deal with banks and insurance firms under the Domestic Debt Exchange Programme (DDEP) as it proposes coupon payment of 5% for 2023.
The set deal was closed on Saturday, January 21, 2023 at a head on meeting between government and the key stakeholders in the financial sector to further discuss and negotiate the deal.
It however appears no consensus has been drawn yet on whether this new proposal has been fully accepted by the various stakeholders in the industry or not, most especially, those from the banking sector since per the feedback gotten from them, they are “working to get a good deal”.
Government though, has proposed to pay 5% interest as coupon payment to individuals in this year, cancelling out the initial plan to pay 0%.
With respect to those in the retirement class, that is, individuals above 60 years and pensioners, there may be an exemption though with improved terms and conditions.
It is not clear yet whether members of the various association groupings really accept the deal.
However, expectations are that they will come out with their briefings in course of the week on their final response to government’s proposal.
Collaborative Efforts Ongoing In The Insurance Sector To Conclude On A Workable Plan
The National Insurance Commission (NIC), the regulatory body for insurance companies, is currently holding discussions with the Ghana Insurers Association (GIA) to develop strategies to prevent any negative effects on companies and policy holders in case the insurance industry is not excluded from the DDEP.
The inclusion of the insurance sector in the program was based on the concern that companies in the industry would fail if the program was implemented in its current form.
Speaking at a ceremony at the Chartered Insurance Institute of Ghana, the Insurance Commissioner, Dr. Justice Yaw Ofori, announced that they will release a statement outlining how to address the issue.
“I’ve heard all when we talk about DDE (Domestic Debt Exchange). I know what you feel. I know what you go through but we have been given the power to use all regulatory forbearances to help sustain our market. We haven’t come out with anything doesn’t mean nothing is going on.
“We’ve had some engagements with the GIA severally. Hopefully by next week, we should have something that we will have a direction on how we will be going so far as regulatory forbearances are concerned.”
Justice Ofori
As part of the CIIG ceremony, Solomon Lartey, former CEO of Activa Insurance, was sworn in as the new President.
The legal committee of individual bondholders stated that they are still evaluating their legal options before proceeding with a court case to seek exemption of individual bondholders from the ongoing DDEP.
According to the Individual Bondholders Committee, it will be too premature to go to court.
This is coming at the time that the technical committee has been created and tasked to further engage individual bondholders on their inclusion in the debt exchange program.
“Haven done the analysis, we feel that it might be too early to go to court right now because our legal rights for a course of action has not accrued. In law, before you go to court, you don’t just get up and go to court.
“We know that you can’t just go to court if you want but you need to check; do you have a course of action? When you go to court, what are the likely questions that the court is going to ask you? What are your likely answers? And when you weigh both of them, what are the probabilities of doing well or not?”
Thelma Tawiah, Corporate & Commercial Lawyer in Practice Management and Professional Business
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