Editorial

Support government’s debt restructuring

Talks about Ghana going to restructure its domestic debts started emerging long before the government presented its Budget Statement and Economic Policy for the 2023 Financial Year to Parliament on November 24, 2022. 

For instance, Bloomberg, a media outlet, started talking about it in September, whereas one DrAnim-Prempeh wrote an article on it in the Ghanaian Times of October 7, 2022.   |    

Maybe all these sources sounded like just speculators, but yesterday the government cleared all doubt by launching its Domestic Exchange Programme as part of measures to restructure and bring the country’s debt portfolio to sustainable levels, with a call on Ghanaians to support the rollout. (See our lead story for details).

Whatever the objective, it is clear that the government wants to buy time in order to be able to meet its debt obligations over a longer period than it is the case under the present arrangements.

This is clear for the fact the programme commences from 2023 and runs till 2037 and during the period, the government would exchange existing domestic bonds for a set of four new ones maturing in 2027, 2029, 2032 and 2037.

As part of the exchange, the annual coupon on all of the payments would be set at zero per cent in 2023, five per cent in 2024 and 10 per cent in 2025 until maturity.

Commenting on the exercise in November before its launch yesterday, Tellimer, a global technology, information and data provider in the financial market, said the details were vague and that vagueness seems to persist, which must be cleared.

There should be an answer, for instance, to whether an individual or institution which invested X amount at 10 per cent interest for the last two years but agrees voluntarily to the restructuring is now going to have the investment stopped at X plus the 10 percent interest as Y and begin the exercise with the Y amount or the restructuring will start with the initial X amount and the interest cut off or paid separately?

Before, the answers would come in, we would like to support the call to all stakeholders to support the exercise to ensure its success.

We first would like to appeal to the Minority to rescind their decision on rejecting the exercise for various good reasons.

However, they, as one group of the people’s representatives, must consider the fact that the government has been clear about the fact that payments relating tothe country’s current debt is unsustainable.

Bloomberg says, for instance, that the country has about $3 billion in cedi debt falling due by June, next year.

What this means is that if nothing innovative is done and the IMF even decides to give us its $3 billion loan before June, that would go into paying just that amount of domestic debt, which is a fraction of$19 billion in outstanding local debt.

It is said that the country’s largest debt investors include local banks and pension funds, so we are calling on them too to embrace the exercise for the economic good of the country for they will in turn have their activities thriving.

We believe that support would also yield some investor confidence in the country.

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