Saturday , 28 January 2023

Debt Exchange: Banks to benefit from regulatory incentives; Individual Bondholders have no fall back – Senyo Hosi

Members of the Individual Bondholders Forum, who are currently being engaged on the Domestic Debt Exchange programme by the Finance Ministry,  have reacted to the agreement reached between the Government and the Ghana Association of Bankers (GAB) on the new terms for the programme. 

The Government of Ghana and the GAB reached the agreement on Monday, January 23.

Earlier, the banks rejected the programme as announced by the government.

The GAB directed commercial banks not to sign onto the amended debt exchange offer over uncertainty surrounding the impact of the debt restructuring on the banking industry.

The association wants its concerns addressed before accepting the debt exchange offer, according to a letter sent to managing directors of banks and seen by 3Business. GAB told member banks that may want to consider the debt exchange in its current form to formally inform the association first before doing so.

“…From the uncertainty surrounding the programme, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD/CEO must inform the CEO of GAB directly of the decision,” according to the letter sent to the banks.”

However, after an engagement with the Ministry of Finance, the Association of Banks that per the new terms, the participation of member banks is subjected to individual bank’s internal governance and approval processes.

Government reaches agreement with banks on new terms for debt exchange programme

“This is a significant milestone towards addressing our economic challenges, and will thus help to restore macro-economic stability and accelerate Ghana’s economic growth.

“With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders,” a joint statement from the Finance Ministry and GAB noted.

In a statement reacting to his development, Covener of the Individual Bondholders Forum, Senyo Hosi said “This development reaffirms the need for government to exclude Individual Bondholders, including individuals and Collective Investment Schemes (CIS), who account for less than 11% of the eligible bonds. Unlike the banks and other institutions who are set to benefit from various regulatory incentives, Individual Bondholders have no fall back nor incentives and will be condemned to shackled penury.

“We urge the government to stay focused on its responsibility to protect its citizens and for that matter, absolutely exempt Individual Bondholders, including individuals who hold eligible bonds under the DDE through Collective Investment Schemes from its DDE programme. We maintain that cutting government expenditure and optimizing revenue is the sure winner for Ghana in these difficult times.”

Below is his full statement…

We have taken note of the joint press release by the Ministry of Finance (“MOF”) and the Ghana Association of Bankers (“GAB”) dated 23rd January 2023. We congratulate both parties for reaching a deal towards the reengineering of our economy.

We observe with delight government’s various incentives provided to the banks which among others include the Bank of Ghana’s forbearances and favourable revisions to the prudential rules including reductions in the Capital Adequacy Ratio and the Cash Reserve Requirements.

To make it much more functional, the government will be providing a financial stability fund to support the viability of the banks.

With the banks onboarding the Domestic Debt Exchange Programme, the government is set to reach its 80% target.

This development reaffirms the need for government to exclude Individual Bondholders,
including individuals and Collective Investment Schemes (CIS), who account for less than 11% of the eligible bonds. Unlike the banks and other institutions who are set to benefit from various regulatory incentives, Individual Bondholders have no fall back nor incentives and will be condemned to shackled penury.

We urge the government to stay focused on its responsibility to protect its citizens and for that matter, absolutely exempt Individual Bondholders, including individuals who hold eligible bonds under the DDE through Collective Investment Schemes from its DDE programme. We maintain that cutting government expenditure and optimizing revenue is the sure winner for Ghana in these difficult times.

Proverbs 14:31 says “whoever oppresses a poor man insults his Maker, but he who is generous to the needy honours the Lord”. May our government be honoured.

Press Release- GAB MoF Deal Affirms need to Exclude IBs and CIS

By Laud Nartey|3news.com|Ghana

About Qwobhy

Check Also

google podcast

Analysis: Ghana’s GDP growth for 2022 lags behind other African countries – AfDB

A woman selling tomatoes in a market in Dedza, Malawi, along the border with Mozambique. …