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Pension fund’s 'haircut': Thank God you’re not losing everything – Kofi Akpaloo to labour unions

85022700 Founder of the Liberal Party of Ghana (LPG), Percival Kofi Akpaloo

Fri, 9 Dec 2022 Source:

Founder of the Liberal Party of Ghana (LPG), Percival Kofi Akpaloo, has told labour unions in the country to accept the potential pension haircuts they will be getting in a debt restructuring exercise the government has announced.

According to him, the government has no choice at this point but to defer the payment of monies it owes debtors, which include pension funds.

Speaking in a Neat FM interview monitored by GhanaWeb, Akpaloo said that the union should be grateful that their members are not losing their entire pensions.

“The government said he is now going to give them four units instead of one (payment). So, it even favours them. If the government says it will not be paying them at all, what will it do? Now, the government is saying that it is going to pay them in four units so they should be grateful to God.

“The government said in the first year it will give them zero per cent interest, in the second year they will be paid five per cent, in the third year 10 per cent and 10 per cent will continue from the 4th year onwards. If you don’t want this, what do you want? This is the best option,” he said in Twi.

The LPG leader said that the Debt Exchange programme the government has announced will not have any significant impact on the livelihood of Ghanaians, adding that the government will surely pay all of its debtors.

Meanwhile, labour unions in Ghana, including the Ghana Medical Association (GMA), the National Association of Graduate Teachers (NAGRAT), the Ghana Registered Nurses and Midwives Association (GRNMA) and the University Teachers Association (UTAG) have asked the government not to apply a "haircut" to Tier 2 Pension Funds as part of the debt restructuring programme it has announced.

The unions have indicated that they will embark on industrial actions if the government’s restructuring exercise affects their pensions.

The Minister of Finance, Ken Ofori-Atta, announced some measures under the government's Domestic Debt Exchange (DDE) programme.

He stated in a 4-minute address on Sunday, December 4, that the announcement was in line with the government's debt sustainability analysis, as contained in the 2023 budget he presented to Parliament on November 24.

The minister laid out, among other things, the exchange of existing domestic bonds with four new ones, as well as their maturity dates and terms of coupon payments.

He also addressed the overarching goal of the government relative to its engagements with the International Monetary Fund as well as measures to minimize the impact of domestic bond exchange on different stakeholders.

"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," he said, before outlining three main measures:

• 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.

Watch the interview below:

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