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IMF move at risk if debt exchange fails – Joe Jackson

A Financial Analyst, Mr Joe Jackson has said Ghana risks losing the support it is seeking from the International Monetary Fund (IMF) if the domestic debt exchange programme does not go through.

He explained that if the debt exchange fails, the country would not be able to achieve debt sustainability, which is a requirement that the IMF is looking out for.

Speaking on the Ghana Tonight show with Alfred Ocansey on TV3 Wednesday, January 11, he said “if we don’t get this debt exchange programme through then we will not be able to achieve our debt sustainability, then the IMF programme will either be delayed or may even be at risk.

“Up until now, the markets have been treating us kindly because everybody’s assumption is that somewhere in February or March IMF is coming through. If we don’t achieve our debt right, if we have to stress them again then IMF will not come when it is due or back off and then, the chaotic debt reforms we are trying to prevent will now happen with all the dark consequences of not being able to access any funds anywhere.”

He further told the government to take advantage of the rejection of the programme from individual bondholders, to engage them and negotiate acceptable terms.

“Take current requests from groups as an opportunity to engage quickly and use this opportunity to negotiate acceptable terms so that the domestic debt programme will go ahead if not as scheduled, at least at this month,” he said.

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 bondholders 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 bondholders who seek to protect their interest to join the class action,” the invitation read.
About 50 bondholders 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 bondholders 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 bondholders, 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|3news.com|Ghana


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