It will also exchange debt in the energy sector, including independent power producers (IPPs), cocoa bills, local US dollar-denominated bonds, and Bank of Ghana non-tradable debt, as part of efforts to bring the country’s debt to sustainable levels.

The Minister of Finance, Ken Ofori-Atta, who disclosed this when he presented the Mid-year Budget Review to Parliament yesterday, said the DDEP had provided the government with increased fiscal flexibility and addressed cash and other liquidity constraints.

He, however, said to complete the domestic debt operations, the government intended to further pursue discussions around some other domestic debt instruments excluded from the DDEP perimeter.

“Mr Speaker, although pension funds were exempted from the main DDEP, we continue to engage them,” Mr Ofori-Atta said.

Of the remaining debt instruments, the government launched debt operations for the cocoa bills and local US dollar-denominated bonds on July 14, 2023, which had a settlement date of July 31, 2023.

Mr Ofori-Atta said the government was also engaging with the IPPs on debt relief and financing arrangements to achieve both debt sustainability for the country and financial sustainability for the energy sector.

Context

On December 5, 2022, the government launched the DDEP, seeking to minimise its impact on bondholders.

After three months of negotiations with the different bondholder groups and amendments to the original terms, the government completed the DDEP on February 14, 2023.

Total bonds outstanding at the settlement date amounted to GH¢126.98 billion, of which GH¢29.29 billion were held by pension funds, bringing the total eligible bonds to GH¢97.75 billion.

The Ministry of Finance received final participation of GH¢82.99 billion, representing 84.9 per cent of total eligible bonds.

Process

The minister said as part of the restructuring process for external debt, the government requested the treatment of the bilateral debt under the G20 Common Framework beyond the debt service suspension initiative.

He said the government also held a series of engagements with its bilateral creditors through the Paris Club to provide financing assurances to support Ghana’s IMF external credit facility request.

Negotiations

Mr Ofori-Atta said the government had also begun the process of negotiating with its commercial creditors, who are the country’s Eurobond investors.

Within the period, he said, two bondholder groups had been formed, comprising domestic and regional bondholders, as well as international bondholders.

“The government has already shared a set of data and scenarios to commence discussions.

“On the restructuring of Eurobonds, we expect to receive counter offers from the bondholders in the short-term, and envisage an agreement by year end,” he said.

The minister said the financial sector, comprising commercial banks, specialised deposit taking institutions, the insurance sector, and fund managers, participated significantly in the DDEP.

He said the effects of the debt operations on the financial sector were elevated liquidity and solvency risks from impairment losses, while regulators, including the Bank of Ghana, provided temporary regulatory forbearance to mitigate the liquidity impact of the DDEP.

Importantly, he said, the government was working with key partners to establish a Ghana Financial Stability Fund to provide liquidity and solvency support to the financial institutions.

The eligibility criteria agreed with regulators and international partners were expected to be published soon, the minister said.

He said these macro-prudential interventions and operations were also expected to address the impact of the large external shocks within a wider global economic context.

Meanwhile, Mr Ofori-Atta said the government was mindful of the impact of the debt exchange programme on individuals, and would be working to stabilise the economy towards a faster economic recovery to ameliorate the impact on the welfare of the individuals.

Unions

Labour unions are, however, adamant, saying they still stand by their earlier decision that the government should exempt pension funds from the DDEP.

The Secretary-General of the Trades Union Congress, Dr Yaw Baah, said the new proposal from the government to the Board of Trustees of Pension Funds to participate in a new alternative offer had not been accepted by the labour front.

While the labour front has urged the trustees of the pension funds not to further engage the government on its new proposal, Dr Baah said there were still deliberations among the various labour unions on the proposal.

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