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Debt Exchange: You can sue if govt defaults but it’ll be difficult to retrieve your cash – Economist

Individual bondholders can sue the government over the domestic debt exchange programme and win the case but it will be difficult for them to access their funds, an Economist, Dr Badu Owusu-Sarkodie, has said.

Dr Owusu-Sarkodie has asked the government to deepen the negotiations with the bondholders in order to arrive at a decision that will be embraced by all.

Speaking on the Ghana Tonight show with Alfred Ocansey on TV3 Wednesday January 11, he said “There are just two options here at the domestic market, either you go for the debt exchange or government defaults. That is also a worrying situation. So yes, I agree that government must deepen negations. I think they are listening to us, they will go all out to negotiate with the individuals with Pensions Funds or whoever is involved.

“I understand that there are about 4000 individual bondholders which are contributing about 8billion Cedis, and then the Pensions Funds were contributing about 11billion Cedis. So you see why the Pensions Funds was unsuccessful and the government decided to substitute that for the individual bondholders.

“So yes, people’s sweat, people’s money, either you go for the the debt exchange or government defaults and when government defaults, you can sue but it will be difficult to retrieve access from government. This conversation is not easy at all.”

A group of individual bondholders is planning to sue the Government of Ghana over their inclusion in the debt exchange programme after initially being spared.

The group has issued an invitation to all eligible bond holders to join the class-action which is expected to be filed next week.

”This decision and action are unconscionable, and the Government cannot be allowed to use its might to impoverish Ghanaians. We are by this bulletin inviting eligible bond holders who seek to protect their interest to join the class action,” the invitation read.

About 50 bond holders have signed up to be part of the lawsuit a few hours after the notice to join was shared on social media platforms, Convener of the group Kwadwo Agyapong told 3Business.

The Ministry of Finance has  however sought to discourage individual bond holders against suing the government, arguing that obtaining judgement against the state in this matter would be difficult.

“The Republic of Ghana is a sovereign state. Consequently, it may be difficult for Eligible Holders of Eligible Bonds to obtain or realise awards against the Republic,” Finance Minister Ken Ofori-Atta said in the 58-page amended debt exchange offer.

“The Republic has submitted to the jurisdiction of the courts of Ghana and waived any immunity from the jurisdiction (including sovereign immunity) of such courts in connection with any action arising out of or based upon the Invitation to Exchange or any securities issued under the Invitation to Exchange brought by any holder of such securities,” it added.

The individual investors have until January 16 to sign onto the debt exchange programme.

Government is offering 12 new bonds with zero interest until 2024 in exchange for existing ones as part of a debt restructuring needed to secure a $3 billion bailout from the International Monetary Fund.

But the programme has seen pushback from local bond holders, compelling the government to exempt pension funds after threatening to embark on a strike.

The agitations could delay the much-wanted IMF board approval for the support programme.

By Laud Nartey||Ghana

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