Debt Exchange: Ghana doesn’t intend to use force to secure participation, like Greece did – Ofori-Atta

Ghana’s Finance Minister Ken Ofori-Atta has said, the recently inaugurated Debt Exchange program is not the country’s first attempt at a domestic debt operation.

He mentioned that Jamaica had previously engaged in such operations, most notably in 2010 and 2013.

In both instances, he claimed, it made the decision to move forward on a voluntary basis and put its faith in the Jamaican people’s sense of responsibility.

According to him, this strategy was very effective because more than 99% of domestic bondholders took part in the exchange.

Instead, he continued, in the instance of Greece, the authorities opted for a coercive strategy, in which a legislation was passed to compel individuals to participate.

When introducing the program in Accra on Monday, December 5, he added, “We seek to avoid the Greek method as much as possible, as we strive to reach a consensual settlement with our bondholders, which is the Ghanaian way.”

“In any event, the good news is that the Domestic Debt Exchange has generated significant outcomes both in Greece and Jamaica, as well as many other countries, and will undoubtedly provide our economy a far better foundation,” he continued.

Greece has regained complete market access. We certainly expect Ghana to experience a similar success. I want to reassure you that the government will take the necessary steps to succeed.

Mr. Ofori-Atta added that the Ghanaian government anticipates resounding support for the debt exchange program.

According to him, the initiative is the most reliable approach to get Ghana’s economy back on track so that jobs can be created and people’s incomes can be protected.

Further, he denied rumors that everyone will get haircuts after the seminar.

He declared, “There won’t be any haircuts.”

He provided more justification for the start of the debt swap scheme.

He claimed that due to the significant difficulties in debt servicing, it has become imperative.

According to him, debt service costs “nearly all of government revenue and almost 70% of tax revenue.”

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

He stated that “domestic bond holders will be requested to exchange their instruments for new ones” as part of the debt exchange program.

He said, “As of the first of December, existing domestic bonds will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”

All of these bonds will have yearly coupons that are 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.

He emphasized, “Coupon payments would be semi-annual.

Source: Ekow Coffie