Stakeholders Against Gov’t Domestic Debt Restructuring

Some stakeholders have registered their displeasure at the government’s domestic debt exchange programme announced by Finance Minister Ken Ofori Atta as means of bringing the country’s debt to sustainable levels.

Teacher Unions, Midwives and nurses, the Chamber of Corporate Trustees of Ghana and the Minority in Parliament have kicked against the programme of the government.

The country’s debt as of the end of September 2022 stood at GH¢467,371.31 million (US$48,871.34 million) according to provisional results. A debt sustainability analysis by the Finance ministry showed that Ghana’s debt is unsustainable.

On Sunday, Ofori Atta announced a domestic debt exchange programme that will transition the country to debt sustainable levels.

He noted that 137 billion of the country’s domestic debt needs to be restructured to get the country’s debt at a sustainable level.

He explained that “under the Programme, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of 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. Coupon payments will be semi-annual.”

The programme, the Chamber of Corporate Trustees of Ghana describes as a “u-turn” on the part of the government, referencing assurances from the President in October that “there would be no haircuts on pension funds”.

According to the Chamber, the programme of the government is “injurious” to the interest of contributors to pension schemes.

“The Pensions Chamber would like to assure contributors to pension schemes that the industry has not agreed to the debt exchange programme proposed by the Ministry of Finance. As Trustees, we hold a fiduciary responsibility and are enjoined to seek the best interest of contributors at all times.”

“We recognize that inflation has caused significant harm to pension fund assets this year and that there is an urgent need to reduce the Government debt burden and restore macroeconomic stability. That should however not be done to the detriment of contributors to pension schemes”, a statement from the Chamber said.

The President of the National Association of Graduate Teachers (NAGRAT), Angel Carbonu also kicked against the government’s plan on Monday.

“The teacher unions will not accept this. We are members of the forum made up of the public sector unions and we want to assure our members that we will resist this move by government by any means necessary…We will not under any circumstances be shortchanged by any government taking away any pensioner’s money,” he stated at a presser.

On their part, the Ghana Registered Nurses and Midwives Association (GRNMA) said it is disappointed about the proposed domestic debt exchange programme.

“It is unacceptable that a government that budgets 18% inflation in 2023 will consider zero rate interest for pension funds of poor, hardworking, law-abiding citizens within the same period.”

The Minority during a press conference on Monday called the programme “unacceptable”.

“Let me state without any fear of contradiction that the form and structure of the debt restructuring plan announced by Minister Ken Ofori Atta are unacceptable to us and we simply will not accept it.”

In a related development, Ofori Atta wrote to Attorney General Godfred Yeboah Dame, seeking to impose the Programme on bondholders under an Executive Instrument, it has been reported.

The A-G, in a response, noted that the process of the government undertaking debt restructuring does not fall within the confines of articles 21 and 31 of the Constitution.

“Debt restructuring which may require the Government to vary terms of its bond agreements will not constitute an emergency situation permitting the President to invoke the emergency powers conferred upon him by the Constitution”, a part of the letter to Ofori Atta said.

Source: opemsuo.com/Hajara Fuseini