Ken Ofori Atta, Minister of Finance
Ken Ofori Atta, Minister of Finance

Debt Exchange programme: New terms must meet IMF expectations - Economist

An economist, Dr Said Boakye, has advised the government to ensure that ongoing revisions to the domestic debt exchange programme (DDEP) meet the expectations of the International Monetary Fund (IMF) on debt sustainability.

He explained that while securing the participation of the various interest groups on time was critical to the success of the programme, it would amount to nothing if the alterations made to get investors onboard were at variance with what was agreed with the IMF.

Consequently, the economics researcher expressed the hope that ongoing revisions to the debt exchange programme were done in consultation with the fund to avoid delays in sealing a deal.

The Head of Research at fiscal policy institute, Institute for Fiscal Studies (IFS), was speaking to the paper on the impact of the revisions and postponements in sealing a DDEP on the impending IMF support.

Dr Boakye said with the country’s gross international reserves as low as $6.23 billion in December last year and the cedi still faltering under the new year pressures, any further delays in securing an IMF support would complicate the challenges facing the economy.

“The only thing now is that they have to conclude the DDEP as soon as possible so that they can go back to the IMF to continue the negotiations and also start the restructuring with the external creditors,” he said.

Debt sustainability structure

To ensure a speedy conclusion of the DDEP and the sealing of a deal in the first quarter, Dr Boakye said current revisions needed to be passed by the IMF.

“Remember that this whole DDEP has to fit into a debt sustainability structure that the government agreed with the fund.

“If you are making revisions to the programme to be able to get more interest groups to participate, then those revisions have to fit into that debt sustainability structure; if not, then there will be problems at the end of the day.

“At this moment, I am trying to believe that government is in touch with the IMF all this while and if they are in the known, I do not think it will impact the programme so much but if they are not, I am afraid the dynamics may change when the government finally presents its results to the fund,” he said.

Since its launch in December, the deadline for the DDEP has been postponed five times, with the latest date now being February 10.

The deadline was shifted from February 7 to this Friday over what the government described as administrative glitches.

The postponements in the deadline have often been accompanied by revisions to the terms of the debt exchange, which are the results of protests and resistance from corporate and individual bondholders.

The DDEP requires investors of cedi bonds to exchange their holdings for longer tenor debts as part of a strategy to ease the country’s debt burden and create fiscal space for a $3 billion bailout support.


Dr Boakye also noted that the adamant nature of the government on the demands of individual bondholders showed that the debt sustainability structure agreed with the IMF lacked enough flexibility.

“The IMF has to give them the flexibility to be able to deal well with the individual bondholders, if not, it will be difficult.

“Also, the IMF has made the DDEP contingent on the restructuring of the external component and the success of the domestic one is what will determine the external one,” he said.

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