Successful execution of DDEP II paves path to stability, IMF support
Ghana has charted a significant stride towards economic recovery with the successful execution of its Domestic Debt Exchange Program (DDEP) Phase II. The DDEP II characterized by robust investor engagement, stands as a resilient response to the country’s economic challenges.
The Phase II of the debt exchange programme which encompassed U.S. dollar-denominated bonds, pension funds, and cocoa bills, has surpassed all expectations, collectively amounting to a substantial US$4 billion. The outcomes of these initiatives, unveiled by the Ministry of Finance in a series of announcements, have not only exceeded projections but are poised to play a pivotal role in rejuvenating the economy and driving restructuring efforts.
In the exchange of U.S. dollar-denominated bonds, an astonishing 92% participation rate was observed, with US$741.7 million worth of old bonds tendered for new ones out of a total of US$809 million. The Ministry of Finance expressed its satisfaction with this outcome, underscoring the strategic implications of this success for the national economy.
Meanwhile, the alternative offer exchange for pension funds witnessed an impressive engagement rate of approximately 95%. This accomplishment reinforces the government’s adept economic strategies amidst the ongoing economic crisis. Under this initiative, pension funds demonstrated their commitment by exchanging GH¢29.6 billion (US$2.6 billion) of existing bonds for new notes maturing in 2027 and 2028, accompanied by a 21% coupon. Moreover, investors embraced the opportunity to exchange US$741.7 million of foreign currency-denominated notes for new securities maturing in 2027 and 2028, offering attractive interest rates of 2.75% and 3.25% respectively.
The resounding success of the pension funds’ alternative offer exchange, achieving a participation rate of nearly 95%, underscores the government’s dedication to implementing robust economic strategies and bolstering the path to recovery, as highlighted in an official statement by the Finance Ministry.
Adding to the successful restructuring, the Ghana Cocoa Board (COCOBOD) reported an overwhelming participation rate of approximately 97.38% in its exchange program, translating to GH¢7.7 billion out of the original GH¢7.9 billion. COCOBOD’s achievement serves as a testament to the unwavering support of eligible holders and stakeholders for the cocoa bills exchange program. To augment its economic prospects, COCOBOD introduced new bonds maturing between 2024 and 2028, offering an enticing 13% interest rate to investors tendering their existing cocoa bills.
These accomplishments, widely regarded as pivotal moments in Ghana’s economic trajectory, hold the dual promise of not only bolstering investor confidence in the government’s strategies but also actively contributing to financial stability and the realization of objectives outlined in the post-COVID-19 Programme for Economic Growth (PC-PEG).
Beyond these transformative financial strides, these accomplishments serve as crucial prerequisites for unlocking payments under a US$3 billion International Monetary Fund (IMF) program. Notably approved in mid-May, this IMF initiative offers additional disbursements contingent upon successful reviews.
Ghana’s resolute efforts to overhaul its debt management strategy have garnered international recognition and support. The successful implementation of the domestic debt exchange plan stands as a lynchpin in conveying the nation’s unwavering commitment to its debt restructuring objectives, subsequently attracting financial backing from bilateral creditors under the auspices of the Group of 20’s Common Framework.
As Ghana forges ahead in its pursuit of comprehensive debt relief to achieve the ambitious goal of reducing debt to 55 percent of GDP by 2028, the achievements witnessed with the DDEP Phase II stand as a powerful testament to the nation’s resilience and its strides toward economic prosperity in the face of adversity.
