On December 5, 2022, the finance minister unveiled a debt exchange programme.

Domestic bondholders are encouraged to exchange their bonds for new ones with later maturities as part of the programme.

"Inviting holders of domestic debt to voluntarily exchange approximately GH137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic," according to Ken Ofori-Atta, was the stated purpose of the announcement.

The Minister explained that: “In particular, it does not embed any principal haircut on Eligible Bonds, as we promised. Let me repeat this fact as plainly as I can, in this debt exchange individual holders of domestic bonds are not affected and will not lose the face value of their investments.

“So let us remove any doubt and discard any speculation that the Government is about to cut your retirement savings or the notional value of your investments. That is not the case. As already announced, Treasury Bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be NO haircut on the principal of bonds. Individuals who hold bonds will also not be affected at all.

With the above explanation by the government, it is quite clear that persons who are direct holders of government bonds are exempt from the programme.

However, holders who have invested in bonds with financial institutions such as banks, insurance companies, investment companies, pension schemes, etc will be affected.

Some of the entities to be likely affected are as follows

1. Securities dealers & funds

2. Private banks and investment companies

3. Insurance schemes

4. Pension funds

5. Non-resident investors

Also, various associations and creditors have asked the government not to touch their investments.

“We, at the GSIA understand the difficult crossroads at which our nation currently finds itself and the difficult choices that need to be made to set us on the path to debt sustainability. However, we are unable to accept the bond exchange program announced by the Minister of Finance in its present form,” GSIA added in the statement issued on December 7, 2022.

Here are some of the groups

Mineworkers Union

Trades Union Congress

Ghana Medical Association

Chamber of Corporate Trustees

Ghana Securities Industry Association

Health Services Workers’ Union

Ghana National Association of Teachers

National Association of Graduate

Ghana Registered Nurses and Midwives Association

The finance minister also explained the debt swap as follows.

“Our domestic debt operation involves an exchange for new Ghana bonds with a coupon that steps up to 10% as soon as 2025 (with a first interest payment in 2024) and longer average maturity. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.

“Predetermined allocation ratios are as follows: 17% for the short bonds, 17% for the intermediate bond, 25% for the medium-term bond, and 41% for the long-term bond. The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity. Coupon payments will be semi-annual. For emphasis, this domestic debt exchange programme will not affect individual bondholders,” he stated.