Debt Exchange: Ghana’s ‘take it or leave it’ model highly unusual – Bright Simons

The Vice President of IMANI Africa, Bright Simons, has described Ghana’s approach to the debt exchange programme as “highly unusual”.

According to him, countries and institutions that have undergone debt restructuring consulted creditors and investors in order to build consensus.

But in Ghana’s case, the proposed programme has come under serious opposition as stakeholders say they have not been

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Various unions and associations including the Ghana Chamber of Trustees, the Ghana Medical Association, and the Trades Union Congress expressed their utmost disapproval of the programme.

Bright Simons in a series of tweets on December 9, 2022, said “1 week after presenting creditors an offer to restructure Ghana's debt, the govt is facing rejection by those who hold ~70% of the debt:
1. Securities dealers & funds
2. Private banks.
3. Insurance schemes
4. Pension funds
5. Non-resident investors
With 10 days b4 the deadline”

He further said that the “Success rate in sovereign debt restructuring is 90%+ so govt has a long way to go. It may have to contend with a "Dominica situation" where the process ended up taking months. Expert Trebesch shows that virtually all recent restructurings have been co-designed with creditors.


“Thus Ghana's "take it or leave it" model with no menu of options to suit different creditor circumstances is highly unusual. Even stranger is the total lack of creditor input in the design of the program. Another serious credibility crisis is now brewing for govt,” he added.

1/
1 week after presenting creditors an offer to restructure Ghana's debt, the govt is facing rejection by those who hold ~70% of the debt:
1. Securities dealers & funds
2. Private banks.
3. Insurance schemes
4. Pension funds
5. Non-resident investors
With 10 days b4 deadline

— Bright Simons (@BBSimons) December 9, 2022

2/
Success rate in sovereign debt restructuring is 90%+ so govt has a long way to go. It may have to contend with a "Dominica situation" where the process ended up taking months. Expert Trebesch shows that virtually all recent restructurings have been co-designed with creditors pic.twitter.com/08JKG4KNaP

— Bright Simons (@BBSimons) December 9, 2022

3/
Thus Ghana's "take it or leave it" model with no menu of options to suit different creditor circumstances is highly unusual. Even stranger is the total lack of creditor input in the design of the program. Another serious credibility crisis is now brewing for govt.

— Bright Simons (@BBSimons) December 9, 2022