Insurers not exempted from debt exchange programme – Finance Ministry
Minister for Finance, Ken Ofori-Atta, has averred exemption of insurance firms from the debt exchange programme is not an option.
In a statement signed by the Finance Minister to the Ghana Insurance Association (GIA), the Minister explained that based on feedback from industry players, government has made some significant adjustments that makes it extremely difficult to exempt insurers from the debt programme.
“Based on your letter and the feedback from you and other industry associations, the Government, working with its advisors, has made significant enhancements to the terms of the exchange instruments to address key concerns raised about accrued interest and zero coupons for 2023. The government has also improved the commercial terms of the exchange instruments; which details were announced on 24th December 2022.
“In this regard, Government encourages a positive response from the industry to enable us to complete the exercise in the interest of the broader economy. In our meeting…you made it very clear, the peculiar nature of your industry and therefore the forbearance required; an exemption, however, is not an option,” parts of the statement read.
The Association in December last year wrote to the Ministry demanding an exemption from the Programme.
According to its president, Seth Kobla Aklasi, 40 percent of its total assets for the Quarter 3 of 2022 were invested in Government of Ghana Securities hence any attempt to give its members a “haircut” will result in liquidity challenges for insurance firms as most of them will not be able to make claims payments to policy holders.
Government after securing a $3 billion staff-level agreement with the International Monetary Fund (IMF) is struggling to restructure its debt, a requirement for approval of the IMF programme.
With much effort to stabilise its debt, the government announced a Debt Exchange Programme in December which it said would affect local bonds, individual investors and international bondholders.
Government said local bonds were to be exchanged for new ones maturing in 2027, 2029, 2032 and 2037, with annual coupons set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.
However, government had to postpone the deadline on three occasions after groups involved in the programme opposed the debt sustainability with fears of a ‘haircut’ on investment.
