The government has assured that moving forward fiscal discipline is going to be key in its dealings especially as the International Monetary Fund (IMF) is coming on board to assist the country to deal with its challenges.
Addressing the media at the launch of the Debt Exchange Programme in Accra on Monday, December 5, Chief Economics Officer and Director of Treasury and Debt Management Division at the Ministry, Samuel Danquah Arkhurst said “Fiscal discipline will be extremely Key going forward.”
Meanwhile, the Minister of Finance, Ken Ofori Atta during the launch justified the introduction of the debt exchange programme.
He said the government has no choice but to undertake the debt restructuring programme to put the debt level on a sustainable path.
Mr Ofori-Atta revealed that debt servicing is consuming almost all of the government’s revenue and which includes 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 bondholders, will be asked to exchange their instruments for new ones.
“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.
Ghana is seeking an economic programme from the IMF to address its balance of payment and other financial challenges.
As part of the deal, the government has embarked on a debt sustainability analysis which indicates that the country’s debt level in excess of 100% of the Gross Domestic Product is unsustainable, hence the need for such an action.
Already, there are calls on the government to provide a road map to avoid the negative impact on the financial sector and other sectors of the economy.