Debt exchange programme a ‘very necessary evil for our economy’ – Gabby Otchere-Darko:

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A leading member of the New Patriotic Party (NPP) Gabby Otchere-Darko has argued that the government’s Domestic Debt Exchange Programme (DDEP) is a necessary evil for the Ghanaian economy although it is a potential guarantor for a better deal for all domestic bondholders in the country.

According to him the hard stand rejection by the bondholders will not augur well for the country’s economic situation.

The Private legal practitioner made the statement in a series of tweets following the refusal by individual bondholders to accept government’s proposed domestic debt exchange programme.

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Government in a bid to rescue the economy and secure a deal with the International Monetary Fund (IMF), proposed that all bondholders will not receive any interests on their bonds for the 2023 financial year.

The payment of dividends, according to government is likely to begin next year, 2024 at a discounted rate of five per cent.

In a series of tweets, he wrote “Ghana is in a very difficult place. What we are seeing with the mobilisation of agitation on individual bondholders poses a real and serious risk worse than what we witnessed when opposition to E-Levy succeeded in derailing an already shaky macroeconomic situation from 2021.

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“The debt exchange programme is voluntary for individual bondholders but a very necessary evil for our economy. Its success is critical to restoring macroeconomic stability, securing an IMF prog. It hits those of us holding bonds very hard. A straight no to it is no solution!” says Gabby-Otchere-Darko.

In his view, if the “no-compromise opposition to it wins, what then has been achieved? It may lead to national debt default. So what then happens to the value of your bonds after! Potentially worthless. If participation is low, we jeopardize resolving the economic crisis and hardships.

I’m sorry but we have to face the hard/painful truths. We ain’t sitting pretty. Our focus must be on how the burden to individual bondholders may be possibly eased; but not to take the hardline position of simply saying no to participation. It will come back to hit us harder.”

He added that if the bondholders fail to cooperate with government, their bonds may be affected in the future in addition to a further deterioration of the economy.

“At least, let’s see, possibly, all pensioners, not just institutional investors, individual pensioners who are bondholders fully isolated from this exchange prog. I said earlier, whatever can be done to ease the burden on individual bondholders in this exchange prog must be done,” the Dankwa Institute boss added.

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