The government has cut interest payments for domestic bondholders to zero percent in 2023 and pegged 2024 interest payments at 5 percent.
However, the government has announced that there will be no deduction on the principal of the bonds, adding that individuals holding government bonds will have full investment on maturity.
In a public address on Sunday, 4 December, on the current economic situation, the Minister of Finance, Ken Ofori-Atta, said that the government will ensure that people’s investments are protected.
He further announced that interest payments for domestic bondholders would be pegged at just 5% for 2024, rising to 10% by 2025.
According to him, it will not affect debt instruments like treasury bills.
“Under the domestic bond exchange programme, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds due on December 1, 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.
“The annual coupon on all of these bonds will be set at zero percent in 2023, 5 percent in 2024, and 10 percent from 2025 until maturity… Correspondingly, Treasury Bills are fully discounted, and all holders are paid full value. Will go their investment at maturity. There will be no deduction on the principal amount of the Bonds and individual holders of the Bonds will also not be affected.”
Mr Ofori-Atta said the relevant financial regulators have taken measures to ensure that the stability of the financial sector is maintained and the impact on investors is minimised.
“Government recognizes that our financial institutions hold a substantial portion of these bonds, therefore the potential impact of this exchange on the financial sector has been assessed by their respective regulators. These regulators have taken measures to safeguard and minimize the potential impact on the financial sector. and have taken appropriate measures to ensure that financial stability is maintained.