Accept debt exchange and move on no matter how bitter it is – Jackson to GoG bondholders

Finance expert, Joe Jackson, has asked the government of Ghana bondholders to accept the conditions of the debt exchange programme recently announced by the Minister for Finance, Ken Ofori-Atta.

The Government of Ghana on Sunday, December 4, 2022, announced a Debt Restructuring Programme asking institutional bondholders to voluntarily exchange their existing bonds for new ones.

The new agreement among other things, will replace existing local-currency debt with four new bonds maturing in 2027, 2029, 2032 and 2037; Finance Minister Ken Ofori-Atta said.

This has seen government entreat local bondholders to accept losses on interest payments set at 0% in 2023, 5% in 2024 and 10% from 2025.

Speaking on Ghana Tonight, Joe Jackson while noting that the exercise will have more impact on small investors asked the investors to accept the programme no matter how bad may be.

“At this moment, individuals who were wealthy enough to buy bonds in their own names are not being touched, Treasury Bills are not being touched. It is corporates that are being touched,” he said.

Describing the situation as unfortunate, Joe Jackson added that, “the smaller investor who is not rich enough to buy bonds in his name is now indirectly, being affected because that investor joined a corporate investment scheme, and the scheme being a corporate entity has been affected by the haircut.

“At this moment, you have got to accept it and move on however bitter the pill is, however unfair the pill is, however angry we feel about the pill,” he said.

The financial analyst however entreated the government to ensure cuts in its expenditure to help the current situation.

“The government must also cut expenditure , this is about cutting expenditure too. At the moment, I don’t think the government has cut enough expenditure. Next year’s budget we are still borrowing GHS61billion.

“That doesn’t make sense to me, that is not a nation in austerity. The government must cut expenditure, they must show that they are willing to bear the pain,” he stated.

Meanwhile, various institutional bondholders have flatly rejected the government's debt exchange programme.

GA/WA