The Ghana Insurers Association (GIA) has agreed to participate in the government’s Domestic Debt Exchange programme, following the government’s guarantees of cushioning affected insurance companies.
This is to be done through the solvency window of the Ghana Financial Stability Fund (GFSF).
The Ministry of Finance and the Ghana Insurers Association announced the agreement at the end of a meeting on Thursday, in a joint statement.
Insurers are expected to engage on similar terms as the banks where the government pays a five per cent coupon rate for 2023 and a single coupon rate for each of the 12 new bonds to be issued, resulting in an effective coupon rate of nine per cent.
“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.
“This milestone on the back of the success with the banking industry, has taken the Government closer to completing the DDEP, which is a key factor to restore economic stability and growth,” the statement read.
The Government invited eligible holders of domestic notes and bonds of the Republic, E.S.L.A. PLC, and Daakye Trust Plc to exchange approximately GHS137.3 billion for a package of new bonds issued by the government on Monday, December 5.
The debt restructuring has become necessary as Ghana’s debt has reached an unsustainable level, with the Government at the risk of not meeting its domestic debt obligations of approximately GHS 137 billion.
Ghana’s debt servicing is now absorbing more than half of total government revenues and about 70 per cent of tax revenues, while total public debt stock, including that of State-Owned Enterprises exceeds 100 per cent of Gross Domestic Product (GDP).
Source: GNA
