Political activist, Bernard Mornah has expressed his concern over the government’s debt exchange programme to restructure the country’s debt into more sustainable levels.
As a critical part of the ongoing negotiations with the International Monetary Fund to secure Ghana $3 billion in support for the economy, the government is exchanging already sold bonds for new ones with a more flexible interest payment plan.
He stated that haircut is a term used by economist . The term haircut is the lower-than-market value placed on an asset when it is being used as collateral for a loan.
He also stated that the finance minister says there will be no haircuts , but anything that affect maturation is a haircut , even the fact that they have to postpone the time when an interest is supposed to be added on your investment , as a result of inadequate capital is a haircut .
Speaking in an interview, Mr. Mornarh said “the fact that citizens are not granted access to their capital when they want to utilize it , Is a haircut . When you do not pay the exact amount to citizens but pay them the market value is also a haircut”.
He stated that all these are instances to prove his point that there will be a haircut so he doesn’t understand why the finance minister is saying there’s no haircut ?
The Government on Sunday announced a slash in interest payments for domestic bondholders to zero percent in 2023 and pegged 2024 interest payments at 5 percent.
According to the government, there will be no haircut on the principal of bonds, adding that individuals with government bonds will have their full investments upon maturity.
In a public address on Sunday, December 4, on the current economic situation, the Finance Minister, Ken Ofori-Atta said the government will ensure that people’s investments are safe.
He further announced that interest payments for domestic bondholders for 2024, will be pegged at only 5% adding that from 2025, the rate increases to 10%.
“Under the domestic bonds exchange programme, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.
“The annual coupon on all these bonds will be set at zero percent in 2023, 5 percent in 2024 and 10 percent from 2025 until maturity… In line with this, treasury bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be no haircuts on the principal of bonds, and individual holders of bonds will also not be affected.”
Story by: Kathlyn Osekre / Ahotoronline.com
