Minister of State for Finance , Hon. Ken Ofori-Atta has accented there will be no reduction (haircut) in the value of assets held by domestic bond holders and treasury bills in the government’s debt restructuring programme.
He observed government is working hard to cut down the impact of the domestic debt exchange on investors holding government bonds, especially on small investors, individuals, and the vulnerable groups.
Hon. Ken explained, “In view of 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; individual holders of bonds will not be affected.”
The finance minister said government has realized the financial institutions hold a substantial proportion of these bonds in the country.
According to him, the potential impact of this exchange on the financial sector has been assessed by their respective regulators.
He continued, “Working together, these regulators have put in place appropriate measures and safeguards to minimise the potential impact on the financial sector and to ensure that financial stability is preserved.”
Ken indicated, the Bank of Ghana, Securities And Exchange Commission, National Insurance Commission, and the National Pensions Regulatory Authority would ensure that the impact of the debt operation on banks declines, using all regulatory tools available to them.
External debt restructuring parameters would be presented in due course.
He emphasized, “Under the programme, domestic bond holders will be asked to exchange their instruments for new ones.
“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.
“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.”
Ofori Atta reiterated government’s commitment to Ghanaians and the investor community, in line with negotiations with the IMF, was to restore macroeconomic stability in the shortest possible time.
It will allow investors to realise the benefits of this debt exchange.
He elated the Financial Stability Fund (FSF) was established by the 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.
He acknowledged the country is in difficult times and called on the support of all Ghanaians and the investor community to make the exercise successful.
“We are confident that these measures will contribute to restoring macroeconomic stability,” he assured.
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