…As finance ministry fondles with their money despite promising not to
The Pensioner Bondholders Forum, has threatened to resume its picketing at the premises of the Ministry of Finance, if the government fails to pay all outstanding coupons and principals of bond investments by April 28, 2023.
This, follows demand by Minister of Finance, Ken Ofori-Atta that the Board of Trustees of pensions funds to allow for pension funds to be included in government’s new proposed debt restructuring offer; a complete shift from his earlier promise to Ghanaians before parliament in February, this year, that the pensioners’ funds will not be touched.
The promise had gotten former Chief Justice Sophia Akuffo and other pensioners who were picketing at the Ministry of Finance off the street.
However, the Minister’s current posturing shows he only bought some time from the pensioners or perhaps lied to Ghanaians including the Members of Parliament (MPS).
Mr Ofori-Atta’s statement explained that the new proposal is aimed at alleviating the cash constraints on the government in the coming years, while fully compensating the Pension Funds for the value of their current holdings.
The Minister further explained that the proposal has been “crafted to facilitate the execution of the MoU, addressing the Government financial needs while maintaining the value of the pension funds.”
Pensioner Bondholders Forum, has also fired a statement signed by its Convener, Dr Adu Anane Antwi, expressed disappointment over the government’s inconsistency regarding assurances to pay all pensioners their outstanding coupons and principals of bond investments.
Organised Labour, had rejected the inclusion of pension funds in the Domestic Debt Exchange programme but the Akufo-Addo government in the release, said the new proposal has been “crafted to facilitate the execution of the MoU, addressing the Government financial needs while maintaining the value of the pension funds.”
The Convener of the Pensioner Bondholders Forum, expressed the pain and financial hardships members have had to go through as a result of the delay and requested that the payments be made as demanded in the Forum’s letter of March 30, 2023, to the Finance Minister, Ken Ofori-Atta.
“We wish to state that we have granted the Ministry a one-week extension to the 21st of April 2023 deadline in our letter of 30th March 2023 for the payment of all outstanding coupons and principles, bringing the deadline now to 28th April 2023.”
“We wish to state finally that if the payments of all outstanding coupons and principals are not made by April 28, 2023, we shall be left with no other option than to resume our picketing at the premises of the Ministry to further press home our demand for the payment of all coupons and principals in arrears, and an end to payment delays.”
The Pensioners also commented on a press release from the Ministry of Finance dated April 14, 2023, that suggested that the leadership of Coalition of Individual Bondholders groups and the Pensioners Bondholders Forum agreed that the Joint Technical Committee constituted on January 18, 2023, reconvenes and agrees on a pathway, towards the settlement of the outstanding debt obligations by April 28, 2023.
The Pensioners said no such agreement was reached.
Breaking down the new offer, the statement noted that “the proposed offer entails exchanging your current holdings of Treasury Bonds, ESLA bonds and Daakye Bonds for a menu of the currently outstanding New Bonds (issued in February 2023 and maturing in 2027 and 2028 respectively.
“The proposed offer entails exchanging your current holdings of Treasury Bonds, ESLA bonds and Daakye Bonds for a menu of the currently outstanding New Bonds (issued in February 2023 and maturing in 2027 and 2028 respectively. New Bond 2027 and New Bond 2028 featuring an average coupon of 8.4 % with a ratio of 1.15x, thus entailing an increase in patrimonial value.”
“This complemented by an additional cash payment of 10% (strip coupon). The stream of coupons to be received as part of this proposal will therefore be 21% compared to the current 18.5% of the outstanding of old bonds,” he added.
He further indicated that “in 2023 and 2024, both instruments will pay 5% coupon in cash and the remainder will be capitalized into the nominal amount of the two bonds in order to comply with the cash constraints and the macro-framework defined under the programme with International Monetary Fund (IMF).”
He says the alternative offer has been designed to “(i) achieve the same average maturity as pension funds current holdings of the old bonds (currently between 4 and 5 years), (ii) achieve a similar average coupon (currently at 18.5%) while(iii) alleviating the cash constraints for the government over the first two years.”
The Finance Minister thus urged the Board of Trustees of pension funds to consider the proposal, indicating that “government is targeting to settle the offer by the end of April 2023.”
It is yet unclear what organised labour which rejected the inclusion of pension funds in the Domestic Debt Exchange programme will do.
On Thursday, February 16, 2023, Finance Minister, Ken Ofori-Atta addressed Parliament on the government’s Domestic Debt Exchange Programme and said all pensioners who did not participate in the bond offering are exempted.
He also reassured pensioner bondholders that the government will honour their coupons, payments and maturing principals “like all government bonds in line with government fiscal commitment”.
“Government remains committed to the wellbeing of our senior citizens. Indeed, it has personally caused me great distress as a number of our pensioners have picketed at the premises of the ministry of finance since Monday, February 6, 2023. I have already indicated in my press release, Mr Speaker dated 14th February 2023 that government will honour their coupons, payments and maturing principals like all government bonds in line with government fiscal commitment,” he stated.
Mr Ofori-Atta, also informed the lawmaking chamber that the government in partnership with developing partners has started the process to establish the financial stability fund to provide liquidity and solvency support to Banks, pension funds, insurance companies, fund managers and collective investment schemes to ensure that they are able to meet their obligations to their clients.
The government on Tuesday, January 14, 2023, closed the Domestic Debt Exchange Programme with over 80 per cent participation of eligible bondholders.
The voluntary programme seeks to tackle the current economic crisis, bring back macroeconomic stability and guarantee sustainable growth.
This comes after five deadline extensions as various groups sought exemptions or improved terms to participate.
