See the debt scheme Ghana is implementing to fix its economic instability

Ghana is currently faced with a deteriorating economy and the country is in desperate need of creative solutions. In this quest, the government recently launched a domestic debt exchange program.

Ken Ofori-Atta, the finance minister of Ghana noted on Sunday in a video that the program would commence as soon as Monday. He disclosed that the government had finished its debt sustainability analysis, and they came up with the aforementioned idea to tackle the domestic debt problem in the country. He however did not mention any policies to tackle external debts.

Under the domestic debt exchange, local bonds will be exchanged for new ones maturing in 2027, 2029, 2032, and 2037 and their annual coupon will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.

The finance minister demonstrated confidence in the newly developed scheme, claiming that the move would help restore macroeconomic stability and put an end to the country’s worst economic crises in decades.

The finance minister went ahead to reveal that the government is looking to curtail the impact of the debt swap on small investors, and as such would not apply the terms to Treasury bills to holders of individual bonds.

Ghana has been working hard to minimize the impact of the domestic debt exchange of investors holding government bonds, particularly, small investors, individuals, and other vulnerable groups.” The finance minister said.

In line with this, treasury bills are completely exempted, and all holders would be paid the full value of their investment on maturity. There will be no haircuts on the principal bonds; individual holders will also not be affected” he added.