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Exclude individual bondholders from domestic debt exchange – Alan urges gov’t

Source the Ghana Report

An aspiring New Patriotic Party (NPP) flagbearer, Alan Kwadwo Kyerematen, has entreated the government to exclude individual bondholders from the domestic debt exchange programme.

According to him, the financial sector will face dire consequences should the government go contrary to this call.

Mr Kyeremanten believes that individual bondholders represent a critical part of the economy and should be protected from the hardships that the exercise could cause.

“When they invest money in bonds, it’s basically savings because instead of them putting the money under their mattresses, they are putting their money in secured instruments.

“If we touch the investments from these venerable groups, we are also making them lose the appetite and the desire for saving, and that is the most dangerous thing that could happen to a country,” he said.

The former Trade and Industry Minister recommended that the government focus on finding good terms for institutional holders and halt the debate on whether to include individual holders.

“In my view, having a debate about including individual bondholders and those involved in this collective scheme is creating a platform for very serious negative discourse, which could potentially create both domestic and international problems for us,” he stated.

Meanwhile, individual bondholders say the government should free their bonds from the debt exchange program following the onboarding of the Ghana Association of Banks (GAB).

The deadline for holders to sign up is barely a week away, and the government is still talking with such investors.

However, the Government of Ghana and the Ghana Association of Banks (GAB) agreed on the terms of participation of Banks in the Domestic Debt Exchange Programme (DDEP).

The new agreement encompasses final improvements to the terms of the programme.

These include; an agreement to pay a 5% coupon for 2023 and a single coupon rate for each of the twelve (12) new bonds resulting in an effective coupon rate of 9%, clarity on the operational framework and terms of access to the Ghana Financial Stability Fund (GFSF) and the removal or amendment of all clauses in the Exchange Memorandum that empowers the Republic to, at its sole discretion, vary the terms of the Exchange.

This was contained in a joint statement from the Finance Ministry and GAB issued on Monday, January 23.

The Association of Banks said per the new terms, the participation of member banks is subjected to individual banks’ internal governance and approval processes.

However, member banks’ participation, in any case, should not be later than the deadline date of January 30.

“This is a significant milestone towards addressing our economic challenges and will thus help to restore macro-economic stability and accelerate Ghana’s economic growth. With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders,” the statement noted.

 

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