News:
Minority Leader
December 5, 2022
Mr. Haruna Iddrisu, the Minority Leader in parliament said the recent debt-restructuring program, announced by the Finance Minister, Ken Ofori-Atta is set to derail and disrupt the plans of bondholders who have planned their lives and expenditure around the expected timely and full payment of their principals in consonance with the terms of purchase of the original bonds.
The Finance Minister during the launch of the debt-restructuring program on Monday, 5th December 2022 details that:
For Domestic Bond holders, there will be a drastic slash in the agreed interests on their existing bonds which have been replaced by four new instruments maturing in 2027, 2029, 2032 and 2037 as follows,
1. In 2023, there will be 0% interest paid them on their bonds
2. In 2024, only 5% interest will be paid
3. In 2025, 10% interest will be paid until maturity.
According to the Minority this implies that for those who have invested their lifetime savings in government bonds and depend on the interests for their livelihood and regular upkeep, they will suffer a drastic reduction in the rate of interest, which will significantly diminish their source of livelihoods.
The President, they indicated denied there would ever be a “A HAIRCUT”, when he was compelled to address the nation after coming under a barrage of public criticism for failing to show leadership and failing to address the nation in the wake of the harrowing hardships and economic crisis.
The debt-restructuring measures put forward by government show steep cuts in interest rates and this clearly exposes the falsehood and hollowness of the President’s claims in the said address.
“Beyond a terse claim that principals of domestic bondholders would not suffer haircuts, the finance minister failed to provide details of what would happen to the principals”.
They stated that they have become aware of the emergence of details of a briefing given by the Finance Minister and officials of the Finance Ministry to stakeholders in the Banking Sector.
It was clearly disclosed at the briefing that bondholders who look forward to having their principals paid upon the maturity of their bonds, are also in for a very rough ride as the Akufo-Addo/Bawumia government has decided not to pay in full when the bonds reach maturity.
The principal payments are to be done according to the under listed formula.
1. In 2027, which is five years from now, only 17% of the principal will be paid.
2. In 2029, seven years from now, only 17% will be paid
3. In 2032, ten years from now, 25% will be paid and
4. In 2037, fifteen years from now, 41% will be paid.
They contend that this will surely lead to hardships for bondholders, not to mention the breach of the original instruments.
The Minority leader also stated that government has also decided to cut a staggering 30% off both the interest and principal of external bondholders, while extending the maturity dates of their bonds by twenty whole years.
“These harsh cuts in the interests and principals of bondholders stem from a self-inflicted economic disaster.
Incontrovertible information reaching us indicates that this decision has been reached after a Debt Sustainability Analysis (DSA) carried out under the aegis of the IMF and World Bank showed that we in the Minority have always been right that our public debt is no longer sustainable”.
Ghanamps.com