We can’t exempt insurance industry from debt exchange – Finance Ministry

The Ministry of Finance has categorically stated that it cannot exempt the insurance industry from the Debt Exchange Programme.

The Ghana Insurers Association in December 2022 called for the exemption of insurance companies from the domestic debt exchange programme.

According to the association, 40 percent of its total assets for the third quarter of 2022 were invested in Government of Ghana Securities hence any attempt to give its members a “haircut” will spell doom for the sector.

But in a letter signed by the Finance Minister, Ken Ofori-Atta to the President of the Ghana Insurers Association, the Finance Ministry stated that it has made some adjustments to the debt exchange programme due to feedback from the industry but cannot exempt the insurance industry.

“Based on your letter and the feedback from you and other industry associations, the Government, working with its advisors, has made significant enhancements to the terms of the exchange instruments to address key concerns raised about accrued interest and zero coupons for 2023. The government has also improved the commercial terms of the exchange instruments; which details were announced on 24th December 2022.

“In this regard, Government encourages a positive response from the industry to enable us to complete the exercise in the interest of the broader economy. In our meeting…you made it very clear, the peculiar nature of your industry and therefore the forbearance required; an exemption, however, is not an option,” parts of the statement read.

Ghana in mid-December 2022 secured a $3 billion staff-level agreement with the International Monetary Fund (IMF) but the country must restructure its debt to get the final approval to access the IMF funds.

In December, Ghana launched a domestic debt exchange and later said it would default on nearly all of its $28.4 billion of external debts.

The government in December further extended the deadline to register for its domestic debt exchange to January 16, 2023, in order to secure internal approvals from the financial sector, the Finance Ministry said in a statement late on Saturday.

Under the original plan, local bonds were to be exchanged for new ones maturing in 2027, 2029, 2032 and 2037, with annual coupons set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.

Under the new terms, however, the Finance Ministry said that eight additional instruments would be created, bringing the total number of new bonds to 12, with one maturing each year from 2027 to 2038.