The government has announced that Treasury Bills holders will receive the full value of their investments upon maturity.
Consequently, all Treasury Bills are exempted from government debt exchange undertaken by government as part of measures to ensure restore macroeconomic stability.
Furthermore, there would be no haircut on the principal of bonds and individuals holding such bonds would not be affected.
Addressing journalists on the country’s domestic debt exchange programme, the Minister of Finance, Mr Ken Ofori-Atta said government had been working hard to minimise the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups.
“The Government recognises that our financial institutions hold a substantial proportion of these bonds. As such, the potential impact of this exchange on the financial sector has been assessed by their respective regulators. 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,” he said.
The Minister noted that the broad contours of the Debt Sustainability Analysis had been concluded and details on Ghana’s Domestic Debt Exchange would be launched today.
“External debt restructuring parameters will be presented in due course. Under the Programme, domestic bondholders will be asked to exchange their instruments for new ones,” he said.
Mr Ofori-Atta explained that, existing domestic bonds as of December 1, 2022 would 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 per cent in 2023, five per cent in 2024 and 10 per cent from 2025 until maturity. Coupon payments will be semi-annual.
Our commitment to Ghanaians and the investor community, in line with negotiations with the International Monetary Fund (IMF), is to restore macroeconomic stability in the shortest possible time and enable investors to realise the benefits of this Debt Exchange,” he said.
Mr Ofori-Atta indicated that the Bank of Ghana, the Securities and Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority would ensure that the impact of the debt operation on financial institutions was minimised, using all regulatory tools available to them.
“A Financial Stability Fund (FSF) is being established by 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,” Mr Ofori-Atta, said.
He noted that these were difficult times which would require the support of all Ghanaians and the investor community in particular.
“We count 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.
With your understanding and support and that of the entire investor community, we shall overcome our current difficulties, and with the help of God, put our economy back on the path of renewed and robust growth,” the Finance Minister emphasised.
The government announced a debt to undertake a debt operational programme in the 2023 budget presented to Parliament on November 24, 2022 to ensure debt restructuring and sustainability.
This is in view of the country growing public debt which currently stands at more than GH₵460 billion, accounting for more than 76 per cent of Gross Domestic Product.