The decision to extend the Domestic Debt Exchange Programme (DDEP) to the last day of this month, following the expiration of the January 16, 2023 deadline, could raise questions over the programme’s credibility, banking consultant, Dr. Richmond Atuahene and Dean of University of Cape Coast Business School, Professor John Gatsi, have said.

While describing the latest extension, the third in a series, as no surprise, Dr. Atuahene warned that the government is in danger of losing its credibility due to the extensions and evident lack of broad consultation.

He also blamed the controversies surrounding the programme on the finance ministry’s ill-advised decision to exempt certain classes of investors from the DDEP, explaining that it has emboldened the previously-included parties to believe they have been disadvantaged.

“Look at the example of Jamaica, which was able to successfully roll out its debt exchange programme. We can’t expect one group to buy in when it sees that others have been excluded,” he stated.

Similarly, Professor Gatsi argued that the extensions should not focus on getting people to sign but a period for the government to do the needful – coming up with a new structure for the programme.

For instance, he wants the government to use the period to restructure the modalities, as this is the only way to guarantee a significant enough buy-in for the programme to be successful.

“Government cannot resolve the problem by wiping out the middle class, by hurting people who use their coupon payments for medication, housing and education,” he stressed.

Whilst expressing optimism that the new extension period is enough time to get increased participation, Prof. Gatsi said government must be conscious that its actions could have long lasting on investor confidence.

“I believe people want to help but it must be in a manner that will let them see that it is worth it. That is how the structure should be… We need it in a manner that does not entirely kill the confidence of investors in government instruments,” he remarked.

DDEP extension

The Ministry of Finance has for the third time extended the deadline for voluntary participation in the Domestic Debt Exchange Programme (DDEP) to Tuesday, January 31, 2023. The previous deadline expired Monday, January 16, 2023 at 4:00 PM.

The extension, the Ministry said in a statement, is to allow for further and broader engagement with stakeholders, especially individual bondholders, to mitigate any adverse impacts.

“Building consensus is key to a successful economic recovery for Ghana. Pending further stakeholder engagement with institutional and individual investors, recently invited to join the debt exchange programme, the government is extending the expiration of the DDE to Jan 31, 2023,” read a tweet from the Finance Ministry.

It said the government structured the Domestic Debt Exchange Programme as a voluntary exercise, in order to shield domestic bondholders while overcoming the current economic crisis. It therefore noted that the extended period will be used to dialogue with stakeholders, especially individual bondholders, to mitigate any adverse impacts.

It added that: “Important discussions are ongoing with financial institutions, notably in relation to forbearance measures, accounting treatment, as well as the structure and parameters of the Ghana Financial Stability Fund (GFSF).”

The Ministry insisted that a successful domestic debt exchange remains critical to kick starting the country’s economic recovery process, and therefore a common interest to make it work.

The move has come as little surprise as pushbacks from various classes of investors guaranteed that the required 80 percent buying threshold could not be met by the January, 16 deadline, similar to previous deadlines set for December 19 and December 30, 2022. As of start of 2023, that threshold was zero percent coupon payments.