The Ministry of Finance in Ghana has taken a significant step towards enhancing the nation’s financial stability by successfully initiating the settlement of the first coupon payment for bonds affected by the Domestic Debt Exchange Program (DDEP). This move underscores the government’s commitment to maintaining the ongoing success and credibility of Ghana’s domestic debt activities.
The DDEP, which was introduced in 2022, aimed to address Ghana’s unsustainable debt burden by allowing eligible bondholders to exchange their existing bonds for new ones. These fresh bonds come with extended maturity periods and reduced interest rates, contributing to a more sustainable debt profile for the nation.
The initial coupon payment, totaling GHC 2.4 billion, has been successfully dispatched to eligible bondholders. Despite initial market uncertainties regarding the government’s ability to meet the 5% coupon payment agreed upon for the affected bonds, the Ministry of Finance has quelled these concerns. The Ministry reaffirmed its commitment to upholding the nation’s domestic debt activities and ensuring the success of the program.
One of the notable outcomes of the DDEP is the transition of the new bonds into the spotlight as the primary instruments within Ghana’s domestic bond market. The restructuring of GHC 87.76 billion of existing bonds into 16 new bonds, with maturing dates ranging from August 2027 to August 2038, has paved the way for a robust recovery in the market.
In a tweet shared on its official handle, the Ministry of Finance acknowledged the contributions of those who participated in the Domestic Debt Exchange Program: “We remain committed to the success of the new bonds and again thank all those who participated in the Domestic Debt Exchange Programme (DDEP), for their sacrifices.”
The government’s proactive approach to debt restructuring has not only reduced the burden of unsustainable debt but has also bolstered the confidence of both domestic and international investors in Ghana’s financial stability. The successful settlement of the first coupon payment is expected to further fortify this confidence, creating an enabling environment for economic growth and development.
As Ghana continues on its path of financial reform and sustainability, the Ministry of Finance’s actions in resolving the challenges posed by domestic debt through innovative programs like the DDEP stand as a testament to the government’s dedication to ensuring a secure economic future for the nation and its citizens.
Photo Source: Google
August 22, 2023
Delino Gayweh
Serrari Financial Analyst
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