Debt exchange programme: Alan Kyerematen’s ’10, 10, 10′ solution



New Patriotic Party (NPP) presidential hopeful, Alan Kyerematen, has proposed an alternative to the government’s intended Domestic Debt Exchange Program (DDEP).

Speaking in a Good Evening Ghana interview, on Monday, January 31, 2023, Alan posited that the current plan of the government is not the best and it will harm individual bondholders as well as businesses.

According to Alan, his plan, which is dubbed the “10,10,10 Solution” will reduce the principal of bondholders by 20 per cent, pay them an interest of 10 per cent per year and will last for only 10 years.

“The 10,10,10 (Solution) that was earlier proposed was that there will be a 10 per cent haircut in the principal of bonds held by institutional bondholders. And then there will be a shorter maturity period of 10 years and then also there will be a 10 per cent interest that is paid on their total bond holding.

“So, 10 per cent reduction in principle, 10 per cent interest for a maturity period of 10 years. What is on the table now is 0 per cent for 2023, 0 per cent for 2024 and in the subsequent years 5 per cent, (which is a) very complicated formula,” he said.

Alan, a former Minister of Trade and Industry, also said that individual bondholders will not be included in his proposed debt restructuring programme.

He explained that government does not need to include individual bondholders in the programme because only 80 per cent of its debts are required to be part of the programme.

“The requirement under the funds (the International Monitory Fund’s) parameters is that 80 per cent of your total debts must be subject to this exchange… institutional holders have almost about 70 per cent (of the government’s debts) and 15 per cent is held by the Bank of Ghana.

“So if you combine Bank of Ghana and let’s say the banks, insurance and other entities, you will have more than 80 per cent of the total bondholders that will have been subject to this debt exchange in which case the vulnerable groups that you are protecting are not up to 20 per cent,” he explained.

He added that institutions that will be included in his proposed programme will be given some assistance to recover.

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