For domestic bondholders, the government has reduced interest payments to zero percent in 2023 and fixed 2024 interest payments at five percent.
However, the government has said that the principle of bonds would not be reduced and that holders of government bonds will get their whole investment at maturity.
The government will make sure that people’s assets are secure, according to Finance Minister Ken Ofori-Atta, who spoke in front of the public on the state of the economy on Sunday, December 4.
He also stated that domestic bondholders will only get 5% in interest payments in 2024, with a climb to 10% in 2025.
He claims that treasury bills and other debt instruments won’t be impacted.
Domestic bondholders will be requested to swap their current securities for new ones as part of the domestic bonds exchange scheme. Existing domestic bonds will be swapped on December 1, 2022 for a group of four new bonds with maturities in 2027, 2029, 2032, and 2037.
All of these bonds’ yearly coupons will be fixed at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity. In accordance with this, treasury bills are totally exempt, and all holders will be compensated for their investments in full when they mature. Individual bond holders won’t be impacted, and there won’t be any haircuts to bond principal.
“The government recognises that our financial institutions hold a substantial proportion of these bonds, hence the potential impact of this exchange on the financial sector has been assessed by their respective regulators. These regulators have put together appropriate measures to safeguard and minimise the potential impact on the financial sector and to ensure that financial stability is preserved.”