DDE review uncovers major flaws and inconsistencies
The Domestic Debt Exchange Programme (DDEP) in Ghana has come under criticism in a recent review, which found the initiative to be plagued by inconsistencies, a lack of transparency and clear objectives, and poor communication.
The authors of the review, Dr. Richmond Atauhene and K.B. Frimpong, stated that the government has failed to provide concrete figures regarding the expected fiscal space that would be achieved through the DDEP.
Furthermore, the authors found the overall strategy for the debt exchange programme to be lacking, as it was only seen as a financial transaction and not as part of the larger economic strategy for the country.
The review also noted that the approach used by the government to achieve participation was too aggressive and lacked stakeholder engagement.
The authors warned of potential losses for local banks, estimated to be worth GH₵41.3 billion, which could negatively impact the banks’ solvency and liquidity.
They also called for reforms to the fiscal space and a more constructive dialogue between the government and creditors to ensure binding commitments are made to share the benefits of cooperation.
The DDEP was launched on December 5th, 2022 and invited holders of 60 old domestic debts to exchange their bonds and notes worth GH₵137.3 billion for a package of 12 new eligible domestic bonds.
Despite several extensions of the deadline, including the offer of new bonds, modifications to exchange ratios, and interest and cash payments, the programme has faced resistance from stakeholders.
The final deadline for the DDEP was on February 10th, 2023, with the government offering new domestic bonds with a maximum maturity of 5 years and a coupon rate of 10 percent for individual bondholders under the age of 59, and 15 percent for retirees.
