The Minister of Finance, Ken Ofori-Atta, in delivering the 2023 budget indicated that, government is set to suspend interest payments for domestic bondholders and impose a 30% haircut on foreign bonds.
This was one of the initiatives the government came up with as one of its debts restructuring arrangement.
Deputy Finance Minister, John Kumah explained that, under the debt restructuring arrangement, domestic bondholders will receive zero interest for 2023.
John Kumah further noted that, bond holders not gaining any interest for the year 2023 does not mean they are losing entirely. In the second year, they will receive only 5% interest and a further 10% interest in the third year.
According to him, domestic bondholders can only expect to start receiving their full interest in 2026. He as well assured that; the principal amount invested by these bond holders will not be affected by the arrangement.
“For foreign bondholders, government is proposing a 30% haircut on both principal and interests. Details of the restructuring will soon be placed before investors. Government is hoping to reach an agreement with investors before the end of the year.
“Government will be placing before Parliament in the next few weeks a new law to amend the terms for all government bonds and to legalize the restructured arrangement.”John Kumah, Deputy Finance Minister.
The Minority Spokesperson on Finance, Dr Cassiel Ato Forson, reacted to this initiative by government, saying, the NDC minority side will reject any attempt by government to pass a law to legalize the restructured arrangement.
According to him, government cannot access an International Monetary Fund (IMF) program approved by the executive board without an arrangement that brings the country’s debt to sustainable levels.
Treasury Bills Will Not Be Affected By Debt Restructuring
Abena Osei Asare, the Deputy Finance Minister, explained that, investments in Treasury bills will not be affected by the debt restructuring initiative announced by the finance minister.
According to her, both the principal and interest earned by T-Bill holders has nothing to do with debt restructuring. Government is looking for lucrative measures to stabilize the economy, but has no focus on T-bill account holders who are already striving to survive in the country, she said.
“It has been stated clearly in the budget read by the finance minister that, T-bills are out of the perimeters of the debt restructuring operations. At the end of the debt restructuring, the Ministry will come out with structures and terms that will ensure that the market corrects itself to build a robust country.”Abena Osei Asare, the Deputy Finance Minister
To conclude, Abena Osei Asare indicated that, exemptions granted to foreigners transacting businesses in the country will be a thing of the past, as the government will tend to focus on such groups due to the depreciation of the cedi.