Debt Exchange: Greece used force to ensure participation; Ghana doesn’t want to do that – Ofori-Atta

Finance Minister Ken Ofori-Atta has said that Ghana is not the first nation to undertake domestic debt operation in the form of the Debt Exchange programme that has been launched.  

He explained that Jamaica resorted to such operations in the past, notably in 2010 and 2013.

In both cases, he said, it chose to trust the sense of responsibility of the Jamaican people and proceeded through a voluntary approach.

This approach was highly successful, as more than 99% of holders of domestic bonds participated in the exchange, he stated.

On the contrary, he added, in the case of Greece, the Authorities chose to undertake a coercive approach, whereby a law was passed to force people into participating.

“We intend to avoid as much as possible the Greek approach, as we strive to reach a consensual solution with our bondholders, which the is Ghanaian way,” he said while launching the programme in Accra on Monday December 5.

He added “In any case, the good news is that the Domestic Debt Exchange has yielded positive results both in Greece and Jamaica, and many others, and will certainly put our economy on a much stronger footing.

“Greece has now recovered full market access. We certainly anticipate a similar success story in Ghana. I want to assure you about the Government’s commitment to do what is necessary to succeed.”

Mr Ofori-Atta further indicated that the Government of Ghana expects overwhelming support for the debt exchange programme.

In his view, the programme is the surest way of restoring the Ghanaian economy back on track to create jobs and protect income of the people.
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He further dismissed speculations that there is going to be haircuts following the programme.

“There will be no haircuts,” he said.

He further justified the introduction of the debt exchange programme.

He stated that it has become necessary because of the enormous challenges with debt servicing.

He revealed that debt servicing is consuming “almost of government’s revenue and also 70 per cent of tax revenue.”

“Which is why we are announcing this to restore our capacity to service debt,” he stressed.

Under the debt exchange programme, he said, ” domestic bond holders will be asked to exchange their instruments for new ones.”

He added “Existing domestic bonds as of 1st December will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”

The annual coupons on all of these bonds will be set at 0 % in 2023, 5% in 2024 and 10% from 2025 until maturity.

“Coupon payments will be semi annual ‘ he stressed.