Ghana’s Finance Ministry yesterday forestalled an impending picket by individual bondholders following complaints that their coupons were yet to be paid as promised.
However, in a statement, the Finance Ministry reiterated government’s commitment to maintaining open and constructive engagement with the CIBG leadership, while affirming its determination to fully implement terms outlined in the Memorandum of Understanding from May 16, 2023.
Government and the Coalition of Individual Bondholders’ Groups on May 16 this year reached an agreement regarding government’s outstanding domestic debt service obligations.
Under terms of the MOU, government undertook to pay all arrears on coupons of bonds maturing by 31st May 2023, as well as coupons falling due from 1st June 2023. The bondholders’ group stated that government had failed to live up to its mandate.
They expressed their dissatisfaction with government’s lack of action, saying payment of some bonds has been in default for over one hundred (100) days. The group had warned that it would picket each day from July 11 until grievances of the lives at stake were addressed.
Government, on July 10, announced payment of all outstanding principals and coupons, and gave a commitment to honour the MoU of 16th May 2023. Consequently, members of the Coalition of Individual Bondholders Groups suspended their planned picketing at the Finance Ministry premises.
The Ministry of Finance’s prompt reaction is good as it averts the embarrassing spectacle of seeing pensioners picket at the ministry’s precincts – as has been the case with this whole Domestic Debt Exchange Programme (DDEP) launched in December 2022.
The programme initially sought to exchange GH¢137.3billion worth of Government of Ghana (GoG) bonds for new ones, but later revised this to GH¢109.84billion. The process was however met with stiff resistance by some groups, particularly organised labour and pensioner bondholders.
The exercise has left a sour taste in the mouths of some investors, particularly as the new bonds were issued with an average of circa 10 percent versus 19 percent for the old bonds.
The sudden loss of value for existing bondholders has led to concerns about the safety of government-issued securities, and has shaken investor confidence.
