The Minister of Finance, Ken Ofori-Atta has announced that there will be no “Haircuts” on the principal of bonds as government implements its “Domestic Debt Exchange Programme (DDEP)”, which will be rolled out in 2023 as part of efforts aimed at restructuring the country’s debt.
He indicated that the government is committed to Ghanaians and the investor community, in line with negotiations with the IMF.
This, he said is to “restore macroeconomic stability in the shortest possible time and enable investors to realize the benefits of this debt exchange.”
The finance minister made the statement on Sunday, December 4, 2022, whiles speaking ahead of the official disclosure of the debt operation programme Monday, December 5, 2022.
He said “The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups.
“In line with this: Treasury Bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be NO haircut on the principal of bonds and individual holders of bonds will not be affected,” he added.
Mr. Ofori-Atta furthered that the government recognises that financial institutions in the country hold a substantial proportion of these bonds and as such that the potential impact of this exchange on the financial sector has been assessed by their respective regulators.
According to him, “working together, these regulators have put in place appropriate measures and safeguards to minimize the potential impact on the financial sector and to ensure that financial stability is preserved.”
“Specifically, the Bank of Ghana, the Securities & Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority will ensure that the impact of the debt operation on your financial institution is minimized, using all regulatory tools available to them.
“A Financial Stability Fund (FSF) is being established by Government with the help of development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes to ensure that they are able to meet their obligations to their clients as they fall due,” the finance minister stressed.