A former Human Resource Manager of the Cocoa Marketing Board has called on the government and the institutions to be affected by the government’s haircut to hold a discussion for a better understanding before the debt restructuring programme implementation.
Mr Elis Ortis Osei (64 years) who was speaking on Angel FM’s Anopa Bofo morning show with Kwamina Sam Biney, said the absence of the conversation would be detrimental to the stakeholders because the debt involved is huge.
“If the corporate institutions do not listen to the government and they intend to take the government to court, it is not likely that they will win the case. The institutions cannot win the case, because the amount the government owes is huge and there is no way the government can pay.
“So the government should come clear and explain issues or sit down with stakeholders to explain issues to them then at the end of the day it can work for the betterment of both the government and the citizenry,” the pensioner stated.
His comments come in wake of the concerns that have been raised about the government’s move which is speculated to affect some individuals who have made investments with the institutions to be affected.
It would be recalled that the Minister of Finance, Ken OFori Atta, announced that the government will be restructuring the country’s debt with the aim of recovering the economy as fast as possible.
According to him the Dept Exchange programme will help minimize the impact of the domestic debt exchange on investors holding government bonds.
“In particular, it does not embed any principal haircut on Eligible Bonds, as we promised. Let me repeat this fact as plainly as I can, in this debt exchange individual holders of domestic bonds are not affected and will not lose the face value of their investments. So let us remove any doubt and discard any speculation that the Government is about to cut your retirement savings or the notional value of your investments.
“That is not the case. As already announced, 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. Individuals who hold bonds will also not be affected at all.
“Our domestic debt operation involves an exchange for new Ghana bonds with a coupon that steps up to 10% as soon as 2025 (with a first interest payment in 2024) and longer average maturity. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.”
Mr Ken Ofori Atta added: “Predetermined allocation ratio are as follows: 17% for the short bonds, 17% for the intermediate bond, 25% for the medium-term bond and 41% for the long-term bond. The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity. Coupon payments will be semi-annual. For emphasis, this domestic debt exchange programme will not affect individual bondholders.
“This domestic debt exchange is part of a more comprehensive agenda to restore debt and financial sustainability. We are also working towards a restructuring of our external indebtedness, which we will announce in due course. This is a key requirement to allow Ghana’s economy to recover as fast as possible from this crisis. This is also a key requirement to secure an IMF support.”
