TUTAG rejects government debt restructuring programme

TUTAG rejects government debt restructuring programme

The Technical University Teachers Association of Ghana (TUGAG) has added its voice to calls for the government to reconsider the newly announced Domestic Debt Exchange programme to allow for greater engagement before it is rolled out.

It said it rejects the current shape and form of the programme as it will further worsen the already precarious economic conditions of Ghanaians.



A statement issued and jointly signed by its president and secretary Surv. Prof. Dr.-Ing. Collins Ameyaw, Abubakari Zakari (PhD), said the financial distress which, necessitated the restructuring of the government’s debt implies a greater risk and, therefore, a higher return should have been proposed.

Interest disparity

"The slashing of interest rates by the government defies investment logic. The 0% coupon rate in 2023 implies that real interest rates on these bonds in 2023 will be negative," the statement said.

"Importantly, the principal also devalues by the inflation rate in 2023. The claim that the principal is intact is, therefore, untenable".

The six-point statement said Ghana's inflation records, at least over the past decade, has always exceeded five per cent.

"So to promise five per cent coupon rate in 2024 means the real interest rate is also negative and the principal will also take a cut.

"In particular, 2024 is an election year and election years have been very inflationary in the past," it said.

The statement said given that Ghana has missed its inflation targets more than it has achieved them since 2007 when inflation targeting started, the offer of 10 per cent coupon rate in 2025 and beyond is equally untenable.

Invariably it said, real returns would be negative many times more than they will be positive.

The statement said indeed, in the best scenarios when real returns will even be positive, they will not exceed four per cent.

However, the statement indicated that in the worse case scenarios, the negative real returns and the erosion of principal could be significant.


It expressed concern with retirement contributions of members invested in government bonds and pension benefits which it maintained will be substantially impaired if the government implements this proposal.

"The subtle coercion of investors into the proposed arrangement, clothed as 'voluntary participation' is unacceptable.

The statement, therefore, urged the government to exhaustively engage the various stakeholders in order not to erode confidence in the domestic financial system.

It said the external financial market is shut to the country and this is not the time to kill the local financial market which is the only hope for the government.

Read the entire statement below;

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