Minority to file motion to exempt individual bondholders from debt exchange programme
Minority Leader in Parliament, Dr. Cassiel Ato Forson, has announced that his side of the House will file a motion to compel the government to exempt individual bondholders from the country’s Domestic Debt Exchange Programme (DDEP). Dr. Forson also indicated that the motion will also include the exemption of pensioner individual bondholders. The motion is set to be filed on Friday.
The decision by the Minority is to ensure that an issuer exemption is granted to bondholders who had faith in the National Democratic Congress (NDC) government to invest in risk-free bonds. Dr. Forson explained that the exemption will protect the individual bondholders and pensioners from losing their investments.
Speaking in an interview, Dr. Forson stated that the Minority is also considering filing another motion requiring the Finance Minister, Ken Ofori-Atta, to present the programme to Parliament for approval. According to Dr. Forson, the Constitution of Ghana stipulates that the terms and conditions of a loan must be approved by Parliament before it can be acquired.
He added that the Public Financial Management Act also affirms that Parliament must make an approval before a loan is sought. Therefore, he noted that the Minister’s engagement in the debt exchange programme is illegal, and his side of the House feels strongly about this.
The Domestic Debt Exchange Programme was launched by the government of Ghana to alleviate the country’s debt burden in a transparent, efficient, and expedited manner while minimizing its impact on investors holding government bonds.
In an address to Parliament on Thursday, Mr. Ofori-Atta announced that as of February 14, 2023, approximately 85% of holders eligible to participate in the Invitation to Exchange had tendered in the Exchange. He expressed his gratitude to Ghanaians for their patience and support throughout the country’s challenging economic times.
Mr. Ofori-Atta noted that the success of the DDEP would build momentum for the external debt restructuring programme, which has also commenced. The government has officially asked bilateral creditors for a Debt Treatment initiative under the G-20 Common Framework, and negotiations have started with commercial creditors, with two preliminary discussions and exchange of information already underway.
The Minister expressed hope that the commercial creditors would understand the government’s desire to negotiate softer terms with bilateral creditors to pave the way for discussions with private creditors.
However, the Minority has expressed concerns about the impact of the DDEP on individual bondholders and pensioners who had invested in government bonds.
According to the Minority, the debt exchange programme does not offer any protection to individual bondholders and pensioners who have invested in risk-free bonds. As such, the Minority has called on the government to exempt these bondholders and pensioners from the programme.
Meanwhile, in response to the concerns of the Minority, Mr. Ofori-Atta has assured pensioners that all of their coupons will be honored upon maturity. Speaking in Parliament about the status of the Domestic Debt Exchange Programme, Mr. Ofori-Atta confirmed that all pensioners who did not tender their old bonds for new ones under the DDEP have been exempted.
However, it remains to be seen whether the Minority’s motion to compel the government to exempt individual bondholders and pensioners from the programme will be successful.
