Inclusion of Insurance Industry in Debt Exchange: Finance Ministry’s stance.
The Ministry of Finance has confirmed that the insurance industry cannot be exempted from the Debt Exchange Programme.
In December 2022, the Ghana Insurers Association called for insurance companies to be exempted from the domestic debt exchange programme.
The association claimed that 40% of its total assets for Q3 2022 were invested in Government of Ghana Securities, making any “haircut” a potential disaster for the sector.
However, the Finance Ministry, in a letter signed by Finance Minister Ken Ofori-Atta to the President of the Ghana Insurers Association, said that it has made adjustments to the debt exchange programme due to feedback from the industry but cannot exempt the insurance industry.
“Based on your letter and the feedback from you and other industry associations, the Government, working with its advisors, has made significant enhancements to the terms of the exchange instruments to address key concerns raised about accrued interest and zero coupons for 2023. The government has also improved the commercial terms of the exchange instruments; which details were announced on 24th December 2022.
“In this regard, Government encourages a positive response from the industry to enable us to complete the exercise in the interest of the broader economy. In our meeting…you made it very clear, the peculiar nature of your industry and therefore the forbearance required; an exemption, however, is not an option,” the statement read.
Ghana secured a $3 billion staff-level agreement with the International Monetary Fund (IMF) in mid-December 2022, but to get final approval and access the funds, the country must restructure its debt.
In December, Ghana launched a domestic debt exchange and later announced it would default on almost all of its $28.4 billion in external debts.
The government extended the deadline to register for the domestic debt exchange until January 16, 2023, to secure internal approvals from the financial sector, according to a statement from the Finance Ministry issued late on Saturday.
Originally, local bonds were to be exchanged for new ones maturing in 2027, 2029, 2032, and 2037, with annual coupons set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.
Under the new terms, the Finance Ministry said that eight additional instruments would be created, bringing the total number of new bonds to 12, with one maturing each year from 2027 to 2038.