As the deadline for the proposed debt exchange remains set for the 31st of January 2023, we wish to provide an update to individual bondholders and collective investment scheme investors, and fund managers for their guidance.
A. HIGHLIGHTS OF MOF MEETING WITH IBF ON FRI. 27th JAN, 2023.
- The Minister of Finance (FM) welcomed the IBF recommendations from the report and indicated that it was something Ghana needs to consider.
- The finance minister iterated the position that the DDE is voluntary for individuals. The government will honour its obligations to individuals who opt to retain their original bonds. Thus, there will be no punitive action against individuals who opt to retain the bonds.
- The MoF has no responsibility for happenings on the secondary market. For this matter, the FM cannot assure market liquidity for the old bonds. He believes the benchmark bonds will be more tradable as more of those will be in circulation.
- The FM understands the unique position of individuals and collective investment schemes – as enumerated by the IBF leadership – for which reason he is considering presenting a revised DDE offer on Monday, 30th January 2022 for individuals to consider participating if they desire. It will remain purely optional and voluntary.
B. THE IBF POSITION
- We welcome the Minister’s affirmation of the rights of individual bondholders to have the benefits of their current investment fully honoured without discrimination or punitive actions against non-DDE individual investors. This, in effect, presents individuals with a self-exemption option which bears no negative implications as far as government’s payment obligations are concerned.
- The original bonds retain more economic value and provides stronger enforcement rights than the DDE bonds. They are also well suited for the investment plans and life goals set by individuals at the time of their investments. In our estimation, this makes the original bonds superior and will be more tradable and liquid. We anticipate increased trading between individuals and pension funds who continue to pursue higher and realistic returns.
- The IBF remains willing and able to assist government further consider the proposed fiscal adjustments and recommendations captured in the joint technical committee report. The report estimates savings or fiscal space in excess of GHS83bn to assist government reduce its DDE indebtedness of GHS138bn.
- The IBF as at the publication of this release has not received the MoF’s revised proposal for our consideration, evaluation and advise to members.
- Individuals, as responsible citizens, have subjected themselves to all the new tax regimes aimed at boosting government revenue without complain. This is a massive contribution to government’s economic turnaround strategy.
C. RECOMMENDATION TO INDIVIDUALS AND COLLECTIVE INVESTMENT SCHEMES
- If you intend to optimise your investments, maintain your superior original/old bonds. Hence, do not sign up to the DDE.
- Do not harbour any form of fear of being punished for rejecting the DDE. The law is in your favour and the Minister of Finance has been categorical in affirming your right by stating that he will honour obligations under the old bonds and will not undertake any action to punish individuals who reject the DDE.
- If you feel compelled to support the DDE programme for other reasons, please, do not hesitate to sign on to the DDE.
- To support the turnaround of the economy, we encourage all not to lose confidence in Ghana’s financial system. The continuous investments and savings of everyone is required to spur the growth of our economy.
- We urge every citizen to file their taxes and honestly pay up all obligations due. We all owe it to Mother Ghana to make things work.
We are grateful to the Finance Minister and the Government for the cooperation extended us during this process.
Senyo K. Hosi