Domestic debt exchange: No haircut on treasury bills, principal bonds – Gov’t

Finance Minister, Ken Ofori-Atta has announced that there will be no “haircut” on the principal of bonds and that individuals with government bonds will have their full investments on maturity.

In a public address on the recent debate about possible haircuts on all bonds and treasury bills following government’s debt restructuring deal with the International Monetary Fund (IMF), Mr. Ofori-Atta said government will ensure that people’s investments are safe.

“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,” he said in an address on Sunday evening.

The Finance Minister noted that government has concluded the broad contours of the debt sustainability analysis and details on Ghana’s domestic debt exchange will be launched on Monday, December 5, 2022.

He however said the external debt restructuring parameters will be presented in due course.

He said the government recognizes that Ghana’s financial institutions hold a substantial proportion of these bonds, “as such, the potential impact of this exchange on the financial sector has been assessed by their respective regulators. Working together, these regulators have put in place appropriate measures and safeguards to minimize the potential impact on the financial sector and to ensure that financial stability is preserved.”

“Specifically, the Bank of Ghana, the Securities & Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority will ensure that the impact of the debt operation on your financial institution is minimized, using all regulatory tools available to them.”

Below is the full speech read by the Finance Minister: