Govt reaches agreement with Insurance Association on debt exchange programme
The Government of Ghana and the Ghana Insurers Association have reached an agreement on the participation of insurance companies in the Domestic Debt Exchange (DDE) programme.
Under the agreement, insurance companies will participate in the exchange on similar terms as the banks.
This was announced in a joint statement by the Ministry of Finance and the Association issued on Thursday, January 26, 2023.
“The government through the solvency window of the Ghana Financial Stability Fund (GFSF) will provide support for the insurance companies that are seriously affected by the DDEP.’
“The objective is to protect jobs and the stability of the Industry,” the statement said.
“The GIA is happy to reach a deal with the government that protects its members but also enables the government to push through the necessary economic reforms at these difficult times”.
Government reaches agreement with Ghana Insurers Association on the Domestic Debt Exchange Programme pic.twitter.com/RpDDc1WFAT
— Ministry of Finance, Ghana (@MoF_Ghana) January 26, 2023
The Ghana Insurers Association had demanded an exemption of insurance companies from the domestic debt exchange programme because 40 percent of its total assets for the third quarter of 2022 were invested in Government of Ghana Securities hence any attempt to include them in the DDE will spell doom for the sector.
But the government through the Finance Ministry said it cannot exempt the insurance industry.
Recently, the Ministry revised some terms of the programme following discussions with the Ghana Association of Banks.
Bondholders will now enjoy a 5% coupon in 2023 which also translates into an effective coupon rate of 9%.
The agreement encompasses final improvements to the terms of the DDEP, namely:
a. An agreement to pay 5% coupon for 2023 and a single coupon rate for each of the 12 new bonds, resulting in an effective coupon rate of 9%.
b. Clarity on the operational framework and terms of access to the Ghana Financial Stability Fund (GFSF).
c. The removal or amendment of all clauses in the Exchange Memorandum that empower the Republic to, at its sole discretion, vary the terms of the Exchange.