Debt Exchange: NDC unable to give alternative ideas – Fmr. Dep MD of NIB

After rejecting the Debt Exchange program made public by Finance Minister Ken Ofori-Atta, Alfred Thompson, a former deputy managing director of the National Investment Bank (NIB), asserted that the opposition’s top leaders were unable to offer substitute proposals.

He questioned the National Democratic Congress’ (NDC) economic management strategies.

On TV3 on Tuesday, December 6, Mr. Thompson urged all Ghanaians to support the program during his appearance on The Big Issue with Berla Mundi.

“I’m begging everyone to help with this, just to get our economy moving again. We all need to be involved if we’re going to revive the economy, he remarked.

He added “You ask the NDC what their alternative measure is, but they they cant give. the opposition couldn’t give any alternative.”

The Minority Leader in Parliament, Haruna Iddrisu, claimed that the debt swap was actually a debt restructure after the program’s introduction.

He argued that the program’s announced shape and organization are undesirable.

Let me state without fear of contradiction that the shape and structure of the debt restructuring proposed by Finance Minister Ken Ofori-Atta this morning are unacceptable to us and we simply will not accept them, Mr. Iddirsu said during a press conference.

“The announcement made by the Honorable Minister of Finance this morning has serious ramifications for the government and Ghana’s financial sector,” he continued.

“It has dire consequences on jobs and dire consequences on pensions and dire consequences on loans who are compelled by legislation to investigate at least 75 per cent  of government instrument and government bonds. We expected government to have thoroughly engaged and consulted before making this far-reaching announcement.”

On Monday, December 5, Accra witnessed the program’s debut by Finance Minister Ken Ofori-Atta.

According to him, the goal of this initiative was to reduce debt in a way that was transparent, effective, and quick.

According to him, the Ghanaian government has been trying hard to reduce the effects of the local debt exchange on investors who own government bonds through the use of an Exchange offer.

In particular, he continued, “as we promised, it does not embed any principal haircut on Eligible Bonds.

I’ll say it again as clearly as I can: Individual domestic bond holders are unaffected by this debt exchange and will not lose the face value of their investments. Therefore, let’s dispel any uncertainty and disprove any rumors that the government is planning to reduce your retirement savings or the nominal worth of your investments. This is not true.

“As already announced, Treasury Bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be NO haircut on the principal of bonds. Individuals who hold bonds will also not be affected at all.

“Our domestic debt operation involves an exchange for new Ghana bonds with a coupon that steps up to 10% as soon as 2025 (with a first interest payment in 2024) and longer average maturity. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.

“The predetermined allocation ratios are as follows: 17 percent for short-term bonds, 17 percent for intermediate-term bonds, 25 percent for medium-term bonds, and 41 percent for long-term bonds. All of these new bonds will have an annual coupon of 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.

“Coupon payments will be made every two years. To be clear, this domestic debt exchange program will not have an impact on specific bondholders.

Source: Ekow Coffie