Gov’t commends investors who participated in the DDEP

The Minister for Finance, Ken Ofori-Atta has commended the all investors who participated in the Domestic Debt Exchange Programme (DDEP).

On 5th December 2022, Government launched the DDEP in a transparent manner while seeking to minimize its impact on bondholders.

“After three (3) months of negotiations with the different bondholder groups and amendments to the original terms, Government successfully completed the DDEP on 14th February. Total bonds outstanding at the settlement date amounted to GH¢126,978.5 million, of which GH¢29,286.2 million were held by Pension Funds, bringing the total eligible bonds to GH¢97,749.6 million. The Ministry received final participation of GH¢82,994.5 million, representing 84.9 percent of total eligible bonds.

Addressing Parliament on the mid-year budget review the Minister said the DDEP has provided the Government with increased fiscal flexibility and addressed cash and other liquidity constraints.

She stated that once again, the government is grateful to all investors who participated in this exchange.

He said to complete the domestic debt operations, Government announced in April 2023 its intention to further pursue the discussions around the following domestic debt instruments which were excluded from the DDEP perimeter namely “Energy sector Independent Power Producers (IPPs); ii. Cocobills; iii. Local US dollar denominated bond; and Bank of Ghana non-tradable debt.

“Out of these remaining Debt instruments, Government launched debt operations for the Cocobills and local US dollar-denominated bonds on 14th July, 2023. The settlement date is today 31st July, 2023. We look forward to a successful operation.”

According to him, although Pension Funds were exempted from the main DDEP, the government continues to engage them.

The Minister indicated that the government is also engaging with the IPPs on debt relief and financing arrangements to achieve both debt sustainability for Ghana and financial sustainability for the energy sector.

“Mr. Speaker, as part of the restructuring process for external Debt, Government requested the treatment of the bilateral debt under the G20 Common Framework beyond the Debt Service Suspension Initiative. Government also held a series of engagements with its bilateral creditors via the Paris Club to provide financing assurances to support Ghana’s IMF-ECF request.

“The Official Creditor Committee for bilateral creditors was established and cochaired by China and France. The Committee provided financing assurances on 12^th May 2023, to support the IMF’s Board approval of Ghana’s IMF-ECF request on 17^th May 2023.

“Mr. Speaker, Government has also begun the process of negotiating with its commercial creditors (our Eurobond investors). Two bondholder groups have been formed, comprising domestic and regional bondholders as well as international bondholders. Government has already shared a set of data and scenarios to commence discussions.”

Mr. Ofori-Atta stated that the restructuring of Eurobonds, the government expects to receive counteroffers from the bondholders in the short-term and envisages an agreement by year end.

Touching on the impact of the Debt Restructuring the Minister stated that the Financial Sector, comprising Commercial Banks, Specialised Deposit Taking Institutions, Insurance Sector, and Fund Managers, participated significantly in the DDEP. The effects of the debt operations on the financial sector is elevated liquidity and solvency risks from impairment losses.

“Regulators, including the Bank of Ghana, provided temporary regulatory forbearance to mitigate the liquidity impact of the DDEP. Importantly, Government is working with key partners to establish a Ghana Financial Stability Fund to provide liquidity and solvency support to the financial institutions. The eligibility criteria agreed with regulators and international partners will be published soon.

“Mr. Speaker, these macro-prudential interventions and operations were also to address the impact of the large external shocks within a wider global economic context, which I now proceed to discuss.

“Mr. Speaker, we are also mindful of the impact of the debt exchange programme on individuals and Government is working hard to stabilise the economy and towards a faster economic recovery to ameliorate impact on the welfare of the individuals.”