Here are 7 reasons government’s debt exchange programme is being rejected

The Vice President of IMANI Centre for Policy and Education, Bright Simons, has stated that the government’s debt exchange programme is being rejected due to some reasons.

According to him, lack of stakeholder engagement with creditors is one of the reasons the programme has come under resistance.

In a write-up sighted by GhanaWeb Business, he listed seven reasons the programme is being opposed.

No stakeholder consultations

Skewed burden sharing

Share of fiscal adjustment unclear

Fear of serial defaults

Credit enhancements

Lack of legislature

Consistency of government narrative

The government in a press statement on December 24, 2022, announced that individual bondholders will be affected by the debt exchange programme.

The finance ministry said that the government was “expanding the type of investors that can participate in the Exchange to now include individual investors.” 

It also added the setting of a non-binding target minimum level of overall participation of 80 percent of the aggregate principal amount outstanding of eligible bonds. 

“Offering accrued and unpaid interest on eligible bonds, and a cash tender fee payment to holders of eligible bonds maturing in 2023," the statement added.

Meanwhile, when the government announced the programme on December 5, 2022, it stated that individual bondholders and treasury bills were to be exempted from the programme.

But the Christmas eve statement said, "there would also be eight new instruments to the composition of the new bonds, for a total of 12 new bonds, one maturing each year starting January 2027 and ending January 2038."

However, the ministry said the modifications would be set forth fully in an Amended and Restated Exchange Memorandum, expected to be published in the week of December 26, 2022. 

“Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the Amended and Restated Exchange Memorandum,” the Ministry added in the release. 

The government also announced an extension to the deadline for voluntary participation in the debt exchange programme to January 16, 2023, from the previous December 30.

SSD/FNOQ