Akwasi Nsiah, a media figure in Ghana and the host of Adom TV's Badwam morning show, has questioned the Finance Minister, Mr. Ken Ofori-Atta, for clues on whether the government can show commitment to the interest payments for domestic bondholders with respect to the bond exchange program.

Mr. Ofori-Atta recently launched a Domestic Exchange Programme as one of the steps to restructure and reduce the country's debt portfolio to levels that are sustainable.

The government would exchange its current domestic bonds for a group of four new ones that would mature in 2027, 2029, 2032, and 2037 as part of the program, which runs from 2023 to 2037.

The yearly coupon on all of the coupons would be set to 0% in 2023, 5% in 2024, and 10% in 2025 until maturity as part of the exchange.

The Minister of Finance, Mr. Ken Ofori-Atta, stated that holders of domestic instruments were invited to voluntarily exchange approximately GH137 billion of the domestic notes and bonds for a package of new bonds that would be issued.

He pointed out that the research on debt sustainability done so far made it clear Ghana's state debt was unsustainable. If nothing was done, he warned, the nation would one day be unable to pay its debts.

"Indeed, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues while our total public debt stock, including that of state-owned enterprises, exceeds 100% of Gross Domestic Product (GDP). This is why we are today announcing that the debt exchange will help in restoring our capacity to service debt," said Mr. Ofori-Atta.

He urged stakeholders and all Ghanaians, to embrace the debt restructuring initiative, calling it the best way to regain macroeconomic stability.

However, on the Badwam show on Thursday, Akwasi Nsiah addressed the matter and urged the Finance Minister with being transparent in order to reassure Ghanaian bondholders about the interest of the bond exchange in the coming ten years.

The outspoken presenter pointed out that giving the bondholders the assurance will ease their worries and encourage them to support the government's efforts to create a stable economy for everybody.

"How confident are we that, if we hold onto our bonds for the next ten years, we will receive the interest of the percentages you have announced? In the case of an unanticipated global shock such as the Russia-Ukraine war, does the government have any funds elsewhere to pay off the bondholders? Can you show us any evidence that the people entrusting you with their investments will receive the precise interest till maturity as stated in the bond exchange program?" He questioned on live TV.

At the moment, Ghana is dealing with an extremely difficult economic climate that is characterized by the COVID-19 pandemic, and the global economic shock created by Russia's invasion of Ukraine. Due to these unfavorable events, Ghana has experienced a sharp spike in inflation, a significant devaluation in its currency, and severe fiscal stress.

To deal with the ongoing economic crisis, the government has asked the International Monetary Fund (IMF) for financial support. The IMF program is intended to restore macroeconomic stability and debt sustainability while preserving financial stability and safeguarding the most vulnerable.

Source: Ghanaguardian.com