Ghana’s Ministry of Finance has announced an extension of the deadline for the domestic debt exchange from December 19 to December 30, 2022 with a contemplated settlement date on January 6, 2023.
According to the Ministry, the extension is in response to feedback from the financial sector on the need to secure internal and Executive Board approvals which are necessary considerations for their participation in the exchange.
A statement issued by the Ministry of finance noted that over the last ten days, government continued the consultation efforts that was initiated with all stakeholders ahead of the launching of the offer, including regulators, bankers, pension funds, asset managers, insurance companies etc.
Complementing the efforts on the structure of the offer, the finance ministry disclosed that it is working with the Bank of Ghana and other regulators (SEC, NPRA, and NIC) in the financial sector and its Advisors and including input from various institutions and the Unions.
“We also fully considered feedback from the financial sector in relation to the need to secure internal and Executive Board approvals which are necessary considerations for their participation in the Exchange. This in some instances may require emergency board meetings etc. The extension also affords Government of Ghana the opportunity to consider suggestions made by all Stakeholders with the aim of adjusting certain measures acceptable within the constraints of the Debt Sustainability Analysis.”
“Considering these developments, and taking cognizance of the festive season, we have decided to extend the Expiration Date of the voluntary offer to Friday December 30th, 2022, with a contemplated settlement date on Friday January 6th, 2023.”
Ministry of Finance
This extension, according to the finance ministry, comes on the heels of the announcement of a Staff Level Agreement (SLA) with the IMF on 13th December 2022.
“We believe this extension will provide enough time for the necessary consultations and analysis to be completed to meet the expectations of local and foreign institutional bondholders while preserving the integrity of the Debt Sustainability Analysis and the Staff Level Agreement.”
Ministry of Finance
Invitation to Exchange
On 6th December 2022 government launched the domestic debt operation (which we formally refer to as the Invitation to Exchange).
The Invitation to Exchange is an arrangement through which holders of Eligible Bonds will submit their holdings of Eligible Bonds governed by Ghanaian law and denominated in Ghanaian Cedis (GHS) for new benchmark Government of Ghana bonds with the same aggregate principal amount, and which have in the aggregate, a lower average coupon and extended average maturity than the Eligible Bonds.
The exchange will take place at certain defined percentages as set forth in the Exchange Memorandum. In an Exchange Memorandum, Mr. Ofori-Atta disclosed that contingency plans have been prepared with applicable regulators to assist certain sectors of the economy (including the financial sector) after its participation in the exchange, to minimize negative spill-overs and safeguard the domestic economy including the establishment of a financial stability fund to provide a backstop for liquidity.
The alternative to the debt exchange, according to him, would be a far worse economic crisis, with protracted closure from international markets (including imported goods and services) and further domestic economic instability both for the real economy and the financial sector. It would also mean depleted fiscal resources to support the neediest, he added.
READ ALSO: Forestry Commission Commended For Successfully Executing Policies In 2022
