The Ministry of Finance has said unequivocally that the insurance business cannot be exempted from the Debt Exchange Programme.
In December 2022, the Ghana Insurers Association requested that insurance businesses be exempted from the domestic debt swap scheme.
According to the group, 40% of its total assets are invested in Government of Ghana Securities for the third quarter of 2022, thus any attempt to give its members a "haircut" will spell disaster for the industry.
However, in a letter signed by Finance Minister Ken Ofori-Atta to the President of the Ghana Insurers Association, the Finance Ministry indicated that while it has made certain changes to the debt exchange program in response to industry comments, it cannot exclude the insurance business.
"Based on your letter and the comments from you and other industry organisations, the Government, working with its advisors, has made major improvements to the conditions of the exchange instruments to address important concerns highlighted concerning accumulated interest and zero coupons until 2023. The government has also improved the commercial terms of the exchange instruments, the details of which were announced on December 24th, 2022.
"In this regard, the government encourages a positive response from the industry to enable us to complete the exercise in the interest of the broader economy," said the government. "In our meeting...you made it very clear, the special character of your industry and hence the tolerance necessary; an exemption, on the other hand, is not a possibility," portions of the statement stated.
Ghana reached a $3 billion staff-level agreement with the International Monetary Fund (IMF) in mid-December 2022, but the government must restructure its debt before receiving final clearance to access IMF funding.
Ghana started a local debt exchange in December and later announced that it would fail on virtually all of its $28.4 billion in external obligations.
The government extended the deadline to register for its domestic debt exchange in December to January 16, 2023, in order to achieve internal clearances from the financial industry, according to a late Saturday announcement from the Finance Ministry.
Local bonds were to be swapped with new ones expiring in 2027, 2029, 2032, and 2037, with yearly coupons set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity under the original plan.
However, under the amended terms, the Finance Ministry announced the creation of eight further instruments, increasing the total number of new bonds to 12, with one due each year from 2027 to 2038.