The Trades Union Congress (TUC) has registered its displeasure over government’s intended debt exchange programme, saying the plan when executed will have a negative impact on workers’ pensions.
After a thorough analysis of the Debt Exchange Programme and extensive discussion of its implications, the TUC has come to a firm conclusion that the initiative will negatively impact pension funds of members, and consequently the retirement income security of workers.
Secretary-General of TUC, Dr. Yaw Baah, speaking to the B&FT in Accra yesterday at a press conference said: “The TUC and its affiliate National Unions have decided that the pension funds of our members will not be part of the Domestic Debt Exchange Programme”.
The TUC is also worried over the lack of engagement with Labour before considering the plan, given that a substantial portion of workers’ pensions is invested in government bonds.
Dr. Baah said the TUC took special notice of the statement by the finance ministry – that the programme is voluntary – and promised its members that they will be fully protected from the programme.
Indeed, the TUC, according to Dr. Baah, has already dispatched a letter to Finance Minister Ken Ofori Atta to exempt all pension funds invested in government bonds from the Domestic Debt Exchange Programme.
The letter, dated December 12, 2022, asked government to – within a week of receiving the letter – announce that all pension funds, including SSNIT, are excluded from the programme.
The letter, which is available to the B&FT, has the TUC concluding that: “the Union will advise itself if government fails to accede to this demand”.
“I would like to remind you that the one-week ultimatum for government to announce the exemption of pension funds from the Debt Exchange Programme will expire on December 19, 2022. We’ll hold another presser on that day to update members and the public on the General Council’s decision, and actions that will be taken in the event that government refuses to accede to our demand to exempt pension funds from the programme,” Dr. Baah disclosed.
He asked workers to get ready to participate fully in any industrial action to protect pensions funds, adding: “Workers will no longer bear the consequences of any IMF-inspired policies. Government is responsible for all the consequences of its decisions”.
The Domestic Debt Exchange Programme
The Domestic Debt operation involves an exchange for new Ghana bonds with coupons of a longer average maturity. Existing domestic bonds as of December 1, 2022 will no longer be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.
The annual coupon on all these new bonds according to the MoF, will be set at zero percent in 2023, five percent in 2024, and 10 percent in 2025 until maturity. Coupon payments will be semi-annual, with the programme not affecting individual bondholders.
