Economic turmoil: OcupyGhana clashes with government over ‘haircut’

OccupyGhana, a pressure group, indicated that it sees the latest “haircut” announcement by Finance Minister Ken Ofori-Atta “as nothing more than a government offer to institutional portfolio investors to accept new terms that modify the circumstances under which the latter acquired the government’s securities.”

OoccupyGhana noted that the declaration asks Ghanaians to “give up legally earned money to help the government out of the mess it has caused.”

The haircuts are a requirement of the ongoing negotiations between the government of Ghana and the International Monetary Fund for a $3 billion extended credit facility to rescue the economy of the West African nation.

On Sunday, December 4, 2022, Mr. Ofori-Atta made the following announcement: “Under the programme, domestic bondholders will be asked to exchange their instruments for new ones”, adding: “Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037”.

Mr. Ofori-Atta added that “the annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity. Coupon payments will be semi-annual”.
However, he pointed out that holders of individual bonds and Treasury Bills are protected from the haircuts. OccupyGhana, in its statement on the finance minister’s announcement, said: “We think that the government has no power under the law and the Constitution to unilaterally impose fresh terms on portfolio investors; negotiation and the mutual consent of all parties will be required”.

Also, the group said, “notwithstanding the claims that individual investors are insulated from the proposed ‘haircuts,’ the millions of Ghanaians whose funds (pension or otherwise) have been invested by institutional fund managers in government securities, will be the ultimate losers in this new offer”.
“That is because those fund managers will simply pass the cuts on to their clients and customers”, OG explained.

It observed: “There is simply no way to understate the terrible consequences that this state of affairs has caused and will cause to Ghanaians”.

“That is why we believe that any offer to the citizens, who are already hit with the multiple effects of inflation and cedi depreciation, to essentially bail the government out of its self-afflicted disaster, must come with an acceptance of failures and a firm commitment to do better”, it added.

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