June 1, 2023
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President Nana Addo Dankwa Akufo-Addo presented his much-anticipated address on the economy on October 30, outlining measures the government was putting in place to deal with economic hardships.

An area he addressed was the issue of restructuring especially with domestic debts as a result of strain on resources. He stated categorically that any talk of such plans were not true.

Incidentally, the issue of local debts restructuring had been prominent only three days prior when the ranking member on Finance in Parliament, Dr. Cassiel Ato Forson proposed restructuring models amid Ghana’s ever-rising unsustainable debt portfolio.

Ato Forson introduced the term of “haircuts” whiles he was delivering a presentation at ‘The Ghana We Want’ lecture that was substantively addressed by former President John Dramani Mahama.

What Ato Forson said:

Dr. Cassiel Ato Forson, in proposing some solutions on how the Nana Addo Dankwa Akufo-Addo-led government can deal with rising public debt warned that the way and manner government wants to go about the debt restructuring will hurt Ghanaians.

“Mr. President, please beware that, a Mickey Mouse form of debt restructuring will hurt Ghana big time. Your debt restructuring must not target domestic creditors. It will destroy us,” he said on Thursday, October 27.

In offering some solutions to the government on how it can deal with what he described as ‘Ghana’s unsustainable debt’ through debt restructuring, the Minority spokesperson on Finance said among others:

“There are three (3) main methods in debt restructuring, namely: Change the maturity date (maturity extension) for amount of Principal or Interest falling due under the affected debts and Introduce Grace Periods.

“Reduce the Principal Amounts of the debt, (a Principal Hair-cut) and

“Reduce the Interest Rate on the debt for bond indebtedness (coupon adjustment).”

He indicated that it is possible to mix and match the three methods above, e.g. maturity extension with a coupon adjustment.

“Debt restructuring is not a science but an art and can be tailored to suit particular debt crises such as Ghana’s problem.

“Creditors can be expected to express strong views about the method chosen to address the sovereign debt problem. Principal haircuts are unfriendly to creditors and maturity extension and coupon reduction are creditor friendly.”

Akufo-Addo’s response:

“The recent turbulence on the financial markets was caused by low inflows of foreign exchange, and was made worse in the last two to three weeks, in particular, by the activities of speculators and the Black Market.

“An anonymous two-minute audio message on a WhatsApp platform predicting a so-called haircut on Government bonds sent all of us into banks and forex bureaus to dump our cedis, and, before we knew it, the cedi had depreciated further.

“All of us can play a part in helping to strengthen the cedi by having confidence in the currency, and avoiding speculation. Let us keep our cedi as the good store of value it is.

“To those who make it a habit of publishing falsehoods, which result in panic in the system, I say to them that the relevant state agencies will act against such persons.

He continued in another aspect of his submission: “I also want to assure all Ghanaians that no individual or institutional investor, including pension funds, in Government treasury bills or instruments will lose their money, as a result of our ongoing IMF negotiations.

“There will be no “haircuts”, so I urge all of you to ignore the false rumours, just as, in the banking sector clean-up, Government ensured that the 4.6 million depositors affected by the exercise did not lose their deposits.”

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