Mandatory Debt Exchange Program would be illegal – Attorney General warns government

Government officials have been cautioned that any obligatory debt swap program would be against the law by Attorney General Godfred Yeboah Dame.

The debt exchange scheme would effect all domestic bondholders, with the exception of those who hold Treasury bills, according to a statement made yesterday by Finance Minister Ken Ofori-Atta.

Bond holders will get 0% interest in 2023, 5% interest in 2024, and 10% interest after that.

Also, the bonds will be redeemed in 3 installments over the course of 10 years.

The Attorney General reportedly recommended against any unilateral modification of Collective Agreement Clauses (CAC), according to papers in the media’s hands.

In his legal advice to the finance minister, the AG urged that any such action be preceded by consultation with domestic bondholders.

The AG claims that given the legal repercussions, the debt swap scheme can only be at most voluntary.

“In the absence of an agreement with parties, it would be unlawful for the government to unilaterally introduce CACs into bond agreements and may constitute an event of default under clause 12 of terms and conditions of the bond issued under the programme” he said.

“Voluntary engagement with parties to bond agreements would be able to produce the outcome of a voluntary modification and inclusion of CACs on bondholders” Mr Dame stated.

The AG’s legal opinion on the debt swap scheme is provided below: