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This comes after the government wrote off half of the 77.6 billion cedis which is equivalent to $7 billion it owed to the Central Bank and replaced the remainder with a lower yielding, 15-year bond, three sources with direct knowledge of the transaction told Reuters.
Reuters reported that the latest move is part of the West African nation’s push to restructure its domestic debt – a requirement to qualify for the next tranche of a $3 billion International Monetary Fund (IMF) rescue loan. Ghana now wants to focus on negotiations with external creditors.
The gold, oil, and cocoa producer concluded the first phase of domestic debt restructuring in February, when 85% of eligible holders exchanged their local currency bonds for new longer-dated bonds, with lower interest rates. This included the central bank which exchanged 17 billion cedis.
The government is now restructuring 123 billion Ghana cedis of domestic debt – including domestic U.S. dollar bonds, cocoa bills, pension funds as well as debt owed to independent power producers and the central bank.
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The Founder of IMANI Africa, Franklin Cudjoe speaking on the development stated that for the Bank of Ghana to allow those huge amounts written off "is very irresponsible."
He said "There is no longer an opportunity to run to the banks and borrow as if there is no tomorrow. Essentially the government has even managed through this DDEP and saved close to 34 billion Ghana cedis. This means that they can say that they are not going to introduce any more taxes.
"Even then they still want to increase that savings by asking pensioners to also get involved in the debt exchange programme. I don’t think it’s fair. What I suspect the government wants to do is to create a lot more fiscal rooms so that they can waste money during an election that is coming in 2024. That is what it is. Let’s not dance around the issue."
"I don't think it is fair to do that pensioners. The whole aim is to spend in an election year. Why am I saying that the government has not attempted to reduce those lofty amounts that have been set aside for capital investment, which we can do without? I mean you can do with 10, 12 billion of those capital investments. If you are in a hole you don't dig further," he added.