DDE: Bondholders express doubts over Finance Ministry’s assurances on debt repayments
Representatives of bondholders in Ghana who did not subscribe to the Domestic Debt Exchange Programme (DDEP) have raised doubts about the assurances given by the Ministry of Finance over the payment of coupons on old bonds.
The Ministry has announced that administrative steps are being taken to ensure that coupons and principals on old bonds are paid by 13 March, however, some bondholders remain sceptical. Speaking during an interview, a legal representative of the Individual Bondholders Association of Ghana, Martin Kpebu, said that the Ministry’s statement did not commit to payment to everyone who is owed money. Kpebu added that all bondholders, including pensioners, would seek assurances from the Minister of Finance, Ken Ofori-Atta, in the coming days.
Ghana’s Finance Ministry has been working to address the country’s high debt levels, including through the DDEP, which was launched in late 2021. The programme aimed to restructure domestic debt by exchanging old bonds for new ones, with extended maturities and lower interest rates.
However, some bondholders chose not to participate, citing concerns over the terms of the exchange. The Ministry has stated that the DDEP was necessary to help reduce the cost of servicing the country’s debt, which has risen sharply in recent years.
The doubts expressed by bondholders come amid wider concerns over Ghana’s economic outlook. The country has faced significant challenges in recent years, including the impact of the Covid-19 pandemic, exchange rate volatility, and high levels of debt. While there have been some positive signs, such as the recent expansion of the economy in the second quarter of 2022, there are still many challenges to overcome.
As such, the Finance Ministry’s efforts to reassure bondholders will be closely watched in the coming days. If the Ministry is able to provide concrete assurances and meet its payment obligations, it could help to build confidence in Ghana’s economic prospects. However, if bondholders remain sceptical and doubts persist, it could make it more difficult for the country to raise new financing in the future.
