Ghana: Make Debt Exchange Programme Acceptable

18 January 2023

As it is the case everywhere in the world, the Ghana government has borrowed domestically in addition to international credits to run the economy and promised to pay interest after agreed periods.

As part of the requirements for Ghana to secure an Extended Credit Facility of $3 billion from the IMF to restore macroeconomic stability and debt sustainability while protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive recovery, the country has to undertake a domestic debt exchange (DDE) programme.

Usually, such a decision follows a Debt Sustainability Assessment (DSA) jointly conducted by the IMF and the World Bank to determine whether the government is able to meet all its current and future payment obligations.

Thus, the current DDE programme being pursued by the country is a sine qua non (an indispensable requirement) for securing the IMF deal.

However, since the government announced the DDE programme on December 5, last year, there have been agitations in the labour sector, and after threats of strikes, the government have amended some details of the DDE.

The agitations, in part, are due to the fact that the government is seeking to amend the interest it promised the lenders (the bondholder) and the duration for which the lender is supposed to get his interest and principal back.

It also seems a good number of people do not have the full understanding of the programme.

Besides, the government seems not forthright about which funds it intends to touch and which ones will be exempted such as pension funds.

Even though the government entered into advance discussions with multiple stakeholders, which resulted in the amendment of the terms of the offer and announced on December 24, 2022, to expire on January 16, 2023, in the circumstances, a further extension has been announced to expire on January 31, to enable it to do broader consultation and build consensus for the programme.

We think this is commendable because the success of the DDE programme hinges on its full understanding and acceptance by stakeholders, particularly the bondholders.

Analysis of the current happenings means the advance discussions done at the outset involved a limited number of the stakeholders.

Even now, we can envisage that some stakeholders could be left out because they may not readily come to mind but can be indirectly affected.

These are non-bondholders but people who have investments with financial institutions that may be included in the programme and as a result cannot pay their clients their interest and principals back at the agreed times.

We should not forget the happenings following the bank-sector clean-up exercise undertaken by the government.

As things stand now, there must be extensive and intensive consultations to build the expected consensus for the success of the programme.

We hope the government would abide by its sovereign decision that the DDE programme is a voluntary exercise, meaning there is room for domestic bondholders to choose to be part of it or not.

We hope this time around, the government would listen to everyone and the other stakeholders too, including the Minority in parliament, would be assertive but with contributions that would be in the interest of the state for Ghanaians to accept the DDE programme for all its benefits

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