Ghana Has Declared Domestic Debt Default - Ato Forson Says Rating Downgrade Looms

Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson, has concluded that Ghana has declared a 'domestic DEBT DEFAULT.'

His views, shared on social media, came on the back of an announcement of a Domestic Debt Exchange by Minister of Finance, Ken Ofori-Atta on December 4.

"Ghana has unfortunately announced a domestic DEBT DEFAULT. Expect rating agencies to downgrade Ghana to D tomorrow!

"Sad day for Ghanaians, the investor community and Banks!" his post dated December 4, 2022; read. It was accompanied by a video of Ofori-Atta's four-minute announcement.

What Ofori-Atta said:

The Minister of Finance announced a number of measures under government's Domestic Debt Exchange (DDE) programme late Sunday.

He stated in a 4-minute address that the announcement was in line with government's Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.

The Minister laid out among others the exchange of existing domestic bonds with four new ones as well as their maturity dates and terms of coupon payments.

He also addressed the overarching goal of the government relative to its engagements with the International Monetary Fund as well as measures to minimize impact of domestic bond exchange on different stakeholders.

"The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups," he said before outlining three main measures:

• 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.

• Individual holders of bonds will not be affected.

Source: ghanaweb.com