The International Monetary Fund (IMF) and the Government of Ghana today, Tuesday December 13, will end their two-week long negotiations for a Staff Level Agreement.
The 2-week long negotiations have centred on the country’s post-Covid programme for economic growth and associated policies and reforms that could be supported by a new lending agreement.
It is anticipated that Government will at the end of today secure the Staff Level Agreement to make headway in the country’s objective of securing a $3bn bailout programme from the IMF.
Hopefully, Government’s recent announcement and subsequent implementation of the Domestic Debt Exchange Programme (DDEP) to restore the country’s public debt to a sustainable level, will play to the advantage of the country and aid the country secure the much needed agreement.
Failure to reach a Staff Level Agreement with the IMF today, will dampen further investor confidence in the economy and entrench the country’s present economic woes.
Finance Chief Ken Ofori Atta, has revealed that the Domestic Debt Exchange Programme (DDEP) by government is a necessary requirement for a deal with the IMF.
According to him, the government has no choice but to undertake the debt restructuring programme to put the country’s debt level on a sustainable path.
In a press briefing on Monday, December 5, Finance Chief Ofori-Atta noted that no individual bondholder will lose their funds in the proposed programme, further assuring financial sector players of government’s support to minimise the impact of the programme on their activities.
Some GHS 137bn in domestic bonds is expected to be exchanged for the ‘new bonds’ by government.
GHS denominated Notes and Bonds issued by the Republic of Ghana accounts for the largest portion of the domestic debt being GHS 126bn in total value.
GHS denominated bonds issued by E.S.L.A. Plc and Daakye Trust Plc account for GHS 8.3bn and GHS 2.7bn respectively of the total domestic bond value.
According to the Finance Ministry, payments of principal value of the ‘new bonds’ will be made per government’s “Exchange Consideration Ratios” where 17% of principal value of bonds will be paid at end-2027; another 17% paid at end-2029; 25% paid at end-2032 and the final 41% paid at end-2037.
Annual coupons on the ‘new bonds’ government asserts, will be set at 0% in 2023; 5% in 2024 and 10% from 2025 until maturity.