Debt exchange: Bondholders can sue but may have difficulty accessing their funds - Economist

An economist, Dr. Badu Owusu-Sarkodie, has stated that even though bondholders can decide to partake in the debt exchange programme or not, there are two options.

According to him, due to Ghana’s unsustainable debt levels, it has become highly necessary for the country to restructure its debts.

However, he noted that if bondholders decide not to partake in the programme, the country will default on its debts.

He added that bondholders can sue government when it defaults, and win against them, but may have challenges accessing and retrieving their funds.

“There are just two options here at the domestic market, either you go for the debt exchange or government defaults. That is also a worrying situation. So yes, I agree that government must deepen negotiations. I think they are listening to us, they will go all out to negotiate with the individuals with Pensions Funds or whoever is involved.

“I understand that there are about 4000 individual bondholders which are contributing about 8billion Cedis, and then the Pensions Funds were contributing about 11billion Cedis. So you see why the Pensions Funds was unsuccessful and the government decided to substitute that for the individual bondholders,” 3news quoted him.

He also added that even though accepting the programme is challenging, the alternative is equally scary.

“So yes, people’s sweat, people’s money, either you go for the debt exchange or government defaults and when government defaults, you can sue but it will be difficult to retrieve access from government. This conversation is not easy at all,” Dr. Sarkodie said.

Government had initially exempted individual bondholders from the debt exchange but later announced their addition on December 24, 2022.

However, the individual bondholders have said they would not partake in the programme.

SSD/FNOQ