Former President John Dramani Mahama has mentioned the brand new debt operation by the federal government will worsen the plight of the native personal sector.
He famous that the federal government’s unilateral provide to pay zero curiosity in 2023 on present home bonds and a suppressed curiosity of between 5 and 10 p.c if the maturity dates are prolonged will additional worsen the state of affairs of the personal sector.
Speaking on the thirteenth Graduation Ceremony of the Accra Business School over the weekend, Mr lamented that “a worst-case scenario is the contemplated compulsory extension of maturities on Government bonds and the haircut investors will have to take if they decide to cash out because they can’t wait that long.
“People have lost value on their investments and could potentially lose even more.”
Finance Minister Ken Ofori-Atta has additionally over the weekend introduced that beneath the anticipated IMF Programme to be introduced, “domestic bondholders will be asked to exchange their instruments for new ones”,
Also, “existing domestic bonds, as of 1 December 2022, will be exchanged for four new bonds maturing in 2027, 2029, 2032, and 2037”.
“The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity”, he introduced Sunday night (4 December 2022).
Coupon funds shall be semi-annual, he mentioned
The authorities is at present negotiating a programme with the International Monetary Fund for a $3-billion credit score facility programme, thus, necessitating the debt restructuring train.
Read Mr. Ofori-Atta’s full tackle under:
Good Evening Ghanaians,
In the Budget Statement introduced to Parliament on November twenty fourth, I introduced that authorities will undertake a debt operation programme.
The broad contours of the Debt Sustainability Analysis has been concluded and I’m right here this night to offer some particulars on Ghana’s Domestic Debt Exchange which shall be launched tomorrow.
External debt restructuring parameters shall be introduced sooner or later.
Under the Programme, home bondholders shall be requested to change their devices for brand spanking new ones.
Existing home bonds as of 1st December 2022 shall be exchanged for a set of 4 new bonds maturing in 2027, 2029, 2032 and 2037.
The annual coupon on all of those new bonds shall be set at 0% in 2023, 5% in 2024 and 10% from 2025 till maturity.
Coupon funds shall be semi-annual.
Our dedication to Ghanaians and the investor neighborhood, in step with negotiations with the IMF, is to revive macroeconomic stability within the shortest attainable time and allow buyers to appreciate the advantages of this Debt Exchange.
The Government of Ghana has been working exhausting to minimise the influence of the home debt change on buyers holding authorities bonds, significantly small buyers, people, and different susceptible teams.
In line with this:
Treasury Bills are utterly exempted and all holders shall be paid the total worth of their investments on maturity. There shall be NO haircut on the principal of bonds. Individual holders of bonds won’t be affected.
The authorities recognises that our monetary establishments maintain a considerable proportion of those bonds.
As such, the potential influence of this change on the monetary sector has been assessed by their respective regulators.
Working collectively, these regulators have put in place acceptable measures and safeguards to minimise the potential influence on the monetary sector and to make sure that monetary stability is preserved.
Specifically:
The Bank of Ghana, the Securities & Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority will make sure that the influence of the debt operation in your monetary establishment is minimized, utilizing all regulatory instruments accessible to them.
A Financial Stability Fund (FSF) is being established by Government with the assistance of growth companions to offer liquidity assist to banks, pension funds, insurance coverage corporations, fund managers, and collective funding schemes to make sure that they can meet their obligations to their shoppers as they fall due.
These are tough occasions and we rely on the assist of all Ghanaians and the investor neighborhood to make the train profitable.
We are assured that these measures will contribute to restoring macroeconomic stability.
With your understanding and assist and that of your complete investor neighborhood, we will overcome our present difficulties, and with the assistance of God, put our financial system again on the trail of renewed and strong development.
As 1st Samuel 30:19 says, nothing was lacking, small or nice.
I say to you, nothing shall be misplaced, nothing shall be lacking, and nothing shall be damaged.
We will, collectively, get better all.
Thank you and God bless our homeland Ghana.
Meanwhile, an IMF employees crew, led by Stéphane Roudet, mission chief for Ghana, has been visiting Accra from, Thursday, 1 to 13 December 2022 to proceed discussions with the authorities on the nation’s post-COVID programme for financial development and related insurance policies and reforms that could possibly be supported by a brand new IMF lending association.
The IMF employees may also additional have interaction with different stakeholders throughout the go to.
Ahead of the go to, Mr Roudet mentioned: “We have had productive discussions with the Ghanaian authorities over the last few months and look forward to our engagement in Accra”.
“Our objective for this visit is to make further progress toward reaching an agreement on policies and reforms that could be supported by an IMF lending arrangement”.
“The IMF remains fully committed to help Ghana restore macroeconomic stability, bring relief to Ghanaians in this time of crisis, and lay the foundation for more inclusive growth.”
In Ghana’s 2023 finances, Finance Minister Ken Ofori-Atta mentioned the federal government and the IMF have agreed on programme targets, a preliminary fiscal adjustment path, debt technique and financing required for an prolonged credit score facility programme to be in step with the federal government’s Post-COVID-19 programme for Economic Growth (PC-PEG).
The PC-PEG is the federal government’s blueprint to revive macroeconomic stability, promote debt sustainability, maintain financial restoration and assist structural reforms.
Updating the home on the negotiations to this point, Mr Ofori-Atta mentioned: “Mr. Speaker, since the government announced its engagement with the International Monetary Fund for a supported programme on 1 July 2022, we have made “substantial progress”.
The Fund, he mentioned, has assured the federal government of its “strong commitment and support in these difficult times”.
Source: class fm
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