Finance
Insurers, Securities industry join domestic debt exchange

The Domestic Debt Exchange Programme (DDEP) is gathering positive momentum as the Ghana Securities Industry Association (GSIA) has become the third financial sector player to agree to join the scheme
The Ghana Association of Banks and the Ghana Insurers Association had also agreed to participate in the programme for institutional bondholders.
The Ministry of Finance and the Association in a joint press statement, announced the terms agreed for participation by capital market operators.
The agreement entailed extending agreed improved terms with the banks to all GSIA members and the removal of all clauses in the Exchange Memorandum that empowers the Republic to, at its sole discretion, vary the terms of the exchange.
Similar to terms of banks, government has agreed to pay five per cent coupon rate for 2023 and a single coupon rate for each of the 12 new bonds to be issued, resulting in an effective coupon rate of 9 per cent.
Government has also committed to providing support to GSIA members impacted by the programme through the liquidity and solvency window of the GH₵15 billion Ghana Financial Stability Fund (GFSF).
The statement assured that collective Investment Schemes (CIS) and individuals who hold bonds in Trust Accounts with Securities and Exchange Commission (SEC) approved firms, will be offered any enhanced commercial terms agreed with, or exemptions granted to, Individual Bondholders.
GSIA said the agreement was necessary to restore market normalcy and confidence in the economy.
GSIA urges its members to seek all required internal approvals and clients’ consent to participate in the DDEP per the new terms in the updated Exchange Memorandum.
With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders.
External factors that negatively affected the economy
COVID-19, Russia-Ukraine war, soaring energy and food prices, higher interest rates, a strong dollar and a global slowdown negatively affected the economy.
Ghana seeking $3 billion loan
Ghana and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.
But, the IMF has made it clear that the Board approval of the deal is contingent on a successful debt exchange programme.
Under the original plan of the domestic debt exchange programme, local bonds were to be exchanged for new ones maturing in 2027, 2029, 2032 and 2037, with annual coupons set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.
Government later modified the terms including eight additional instruments to be created, bringing the total number of new bonds to 12, with one maturing each year from 2027 to 2038.
Following the inclusion of pension funds, outcry by labour and advocacy groups, led government to exempt pension funds from the programme.
Despite their initial exemption, individual bondholders have also been included in the programme.
Government is on a series of stakeholder engagements, to reach consensus with affected groups, on the terms of their participation in the Domestic Debt Exchange Programme.
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Finance
Ofori-Atta appeals to Parliament to approve revenue measures

Finance Minister Ken Ofori-Atta has informed parliament of his intention to present necessary fiscal adjustments to the house in august after the debt operation is completed.
Outstanding revenue mobilisation bills
Already, he said the Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, are outstanding in Parliament.
According to him, the consideration and approval of fiscal measures by Parliament are critical for recovery from the current economic crisis.
Facilitating IMF Board approval
The Minister therefore entreated Parliament to prioritise the approval of the outstanding revenue mobilisation bills to facilitate the Board Approval for International Monetary Fund (IMF) Programme staff level agreement by the end of March, 2023.
“We are still counting on you for the passage of all the outstanding revenue Bills which are necessary for effective Budget Implementation as well as boosting our efforts at increasing our Tax-to-GDP from less than 13% to the sub-Saharan average of 18,” he stated.
Expected impact of IMF Board approval
He is confident IMF Board approval will restore macro-economic stability, ensure debt sustainability as well as provide critical social protection for the benefit of Ghanaians.
Factors that impacted economy negatively
COVID-19, Russia-Ukraine war, soaring energy and food prices, higher interest rates, a strong dollar and a global slowdown negatively affected the economy.
Ghana seeking $3 billion loan
Ghana and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.
But, the IMF has made it clear that the Board approval of the deal is contingent on a successful debt exchange programme.
Broader govt response strategy
Addressing Parliament on the ongoing debt restructuring efforts, Ofori-Atta explained that debt operations are a composite part of a broader government response strategy for addressing the current challenges.
While being optimistic about IMF programme to boost confidence in the economy, he emphasized that complementing it with enhanced domestic mobilisation efforts is critical.
4 out of 5 agreed Prior Actions in the Staff Level Agreement
The Finance Minister averred that the passage of the Bills will enable government to complete four out of five agreed Prior Actions in the Staff Level Agreement.
Agreed Prior Actions already implemented
He noted that tariff adjustment by the Public Utilities Regulatory Commission (PURC), Publication of the Auditor-General’s Report on COVID-19 Spending, and Onboarding of Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF) and Road Fund on the Ghana integrated financial management information system (GIFMIS) have all been completed.
International and domestic bond markets are shut
Ofori-Atta reminded the legislators that the international and domestic bond markets are shut for the financing of government’s programmes, forcing government to rely on the Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year.
Therefore, he called on Parliament to support the government’s financing requests to ensure a smooth recovery from the economic challenges.
He thanked everyone who tendered and supported the Domestic Debt Exchange programme saying “It is a truly remarkable act of sacrifice in our nation’s history. We thank those who heeded our clarion call and took the selfless, patriotic decision to participate. Your names and deeds will never be forgotten. Your timely support is deeply appreciated,”.
He is confident that the programme government has set out for this year, supported by Parliament, will get Ghana out of the economic crisis that has hit the economy since Covid-19.
Inflation interest and exchange rates to stabilise
He hopes for stability in the exchange rates, inflation and interest rates, bringing businesses and families some respite.
Suspension of payments of interest on foreign debt
Government also announced a suspension of all debt service payments for certain categories of external debt, pending an orderly restructuring.
International bondholders
Ofori-Atta revealed that Ghana initiated discussions with representatives of international bondholders and their Advisors.
According to him, substantive discussions are due to start with them in the weeks to come.
G-20 Debt Treatment initiative
Ghana officially asked its bilateral creditors for a Debt Treatment initiative under the G-20 Common framework.
Negotiations with commercial creditors underway
The Finance minister said the process of negotiations have started in good faith with commercial creditors.
Ofori-Atta stated that two preliminary discussions and exchange of information have started on a good footing with representative committees and advisors.
Creditor Committee to assess Ghana’s request
According to him, the members have indicated their commitment to establish a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework by end February, 2023.
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Finance
IMF assigns resident financial supervision adviser to BoG

The International Monetary Fund (IMF) has assigned a Resident financial sector supervision adviser to the Bank of Ghana (BoG) to provide technical assistance and help build the capacity of the banking supervision function.
The appointment was at the request of Bank of Ghana with full funding from Switzerland’s State Secretariat for Economic Affairs (SECO).
Mr. Leonard Chumo, the Resident Adviser, started his assignment at the Bank of Ghana on February 6, 2023, and was expected to stay for three years.
A statement issued by BoG in Accra said the Adviser’s placement was a continuation of cooperation in this area between the Bank, the IMF and SECO, that started as early as in 2015 and had already seen the assignment of a previous Adviser until 2018.
It said achievements from the past collaborative efforts include the passage of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the development and issuance of the Corporate Governance Directive 2018, and the Capital Requirement Directive 2018.
Mr Chumo, brings first-hand knowledge of supervisory work from leading central banks as well as previous technical assistance experience in the Western Africa region.
The statement said among others, he would support the implementation of Pillar two and three of the Basel II/ III capital frameworks, as well as strengthen the Risk-Based Supervisory framework at the Bank of Ghana.
The Bank commended the management of SECO for the continued funding of Long-Term Technical Experts from the IMF to the Bank.
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Finance
Govt pledges to pay coupons, principals on all maturing bonds

Government has assured all bondholders, including those who self-exempted from the voluntary Domestic Debt Exchange Programme (DDEP) that it will honour all coupon payments and maturing principals when due.
Payment of coupons and principal for bonds that matured since February 6 to date (herein referred to as ‘Due Bonds’ remain outstanding.
Bondholders want government to make payments not later than Friday, February 17, 2023.
A statement issued by the Finance Ministry indicates that more than 80% bondholders participated in its $137 billion DDEP.
“The DDEP closed on Friday February 10, 2023, with over 80% participation of eligible bonds,” it said.
The Finance Ministry pledged to honour all coupon payments and maturing principals in addition to commitments to further streamline Government’s expenditures.
“We would like to stress that, all Individual bondholders, especially our Senior Citizens, should rest assured that their coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government’s Fiscal commitments.
“The Government would like to reassure all individual bondholders who elected not to participate that your coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government fiscal commitments,” it added.
Government reiterated that the DDEP had been executed to help protect the economy and enhance Ghana’s capacity to service its public debts effectively, as its debt had become unsustainable.
The alternative for not executing the DDEP would have brought grave disorder in the servicing of our national debt and exacerbated the current economic crisis.
It expressed gratitude to bondholders for the overwhelming participation, adding that their support and contributions had gotten Ghana much closer to securing the International Monetary Fund (IMF) programme.
There are fears that those who opt against signing up are not guaranteed market liquidity for the old bonds, because they are likely to become less tradeable on the secondary market compared with the new bonds.
On the other hand, individuals who sign up for the new bonds will have more certainty even in a changing economic landscape.
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