Government acting like emperors; bondholders are full stakeholders – Bright Simons on debt exchange

The Honourary Vice President of IMANI Africa is unenthused by the approach government is taking regarding the Domestic Debt Exchange.

Bright Simons says the treatment that the Finance Ministry has subjected bondholders to does not augur well for the success of the programme.

The policy analyst believes that the stance that government has taken towards individual bondholders is rather misplaced adding that the actual power lies within the people.

Individual bondholders have fought against the government’s attempt to rope their funds into the programme which they say will wipe off their hard-earned money.

“The challenge is that on the home front, the government is not willing to listen to the people that are now full stakeholders in the matter… You are asking people to sell their houses and cars and give you their money? How can you do that and try and pretend like you are an emperor issuing orders from above,” he quizzed.

He was speaking on the JoyNews’ Newsfile on Saturday, January 21, 2023.

He argued that it is the bondholders that rather have to be working with “you [government], to see how they can help you. It is you who needs help, not they who need the help. In fact, they [bondholders] shouldn’t be asking you [government] for relief and all that. You are the one asking for relief.”

Meanwhile, government has extended the deadline for bondholders to sign up for the process to help ensure a successful bailout from the International Monetary Fund (IMF).

Background

Government in a bid to rescue the economy and secure a deal with the International Monetary Fund (IMF), government has proposed that all bondholders will not receive any interest on their bonds for the 2023 financial year.

The payment of dividends, according to government is likely to begin next year, 2024 at a discounted rate of 5%.

In relation to this, bondholders who may want to transfer their bonds will not be able to get the full principal they initially invested as bonds.

This proposal, since its announcement, has been rejected by many bondholders who have expressed frustration about the development.

In their view, if the proposal is implemented, they will suffer a great deal of loss, with many of them stating that their investments may even become unprofitable.