AG advises against use of executive powers in debt restructuring
The Attorney General of Ghana, Godfred Dame, has advised the Finance Minister that the use of executive powers to unilaterally modify bond agreement terms in a government debt restructuring programme would be unconstitutional.
In a letter to the Finance Minister, Mr Dame stated that the use of executive powers to impose Collective Action Clauses (CACs) on bondholders would not only be a breach of bond agreements, but also contravene articles 107 and 20 of the 1992 Constitution.
According to Mr Dame, although the Constitution confers executive powers on the President, it is not intended that these powers can be used to impose CACs on bondholders without the necessity of such extraordinary measures.
He also emphasized that debt restructuring does not fall within the confines of the articles of the Constitution that confer executive powers on the President.
Furthermore, Mr Dame stated that in the absence of agreement by bondholders and other relevant parties, such as banks, pension funds and insurance firms, it would be unlawful for the government to unilaterally introduce CACs into existing bond agreements as it would constitute an event of default on the part of government.
The advice from the Attorney General is a significant development in the government’s planned debt restructuring programme, and it remains to be seen how the Finance Minister and government will proceed in light of this advice.
It highlights the delicate balance between government efforts to restructure debt and the rights of bondholders and other stakeholders in the process.
Ken Ofori-Atta sets-up technical committee to engage individual bondholders
Meanwhile, the Minister for Finance Ken Ofori-Atta, has set up a technical committee to engage individual bondholders on their inclusion in the domestic debt exchange programme.
The set-up of the committee follows a closed-door meeting with Conveners of the Ghana Individual Bondholders Forum on Wednesday, January 18, 2023.
Convener for Individual Bondholders Forum, Senyo Hosi who was present at the meeting stated in an interview that the Committee after its work will make some recommendations upon which the exclusion of their bonds will be decided.
“We have agreed to set up a committee to work together on proposals that can help manage the challenges…we are looking forward to that committee starting work tomorrow.
“A technical committee is to come up with some work and based on those analysis, there will be a position that the Finance Ministry will take. We will come up with our recommendations jointly and we want to believe that we will all find a reason in trying to exempt the individual bondholders,” he remarked.
Per reports, the Committee will immediately have its first meeting today, Thursday, January 19.
