TUC, NAGRAT, GMA, others that have rejected government debt restructuring

Institutional bondholders will be affected by the government’s domestic debt exchange program, which has been opposed by a number of professional institutions.

The main argument is that the government should never touch pensions since most of them are in bonds issued by institutions.

Ghana might not get any help from the IMF – PV. Jantuah Minister of Finance Ken Ofori-Atta said on December 5 that all bonds have been put into four categories as part of a restructuring program that was needed because of recent economic problems.

Individual bondholders and Treasury Bill investors were exempt from the exchange, but the Minister explained the main rules as follows:

“Under the Program, people who own domestic bonds will have to trade them in for new ones. On December 1, 2022, existing domestic bonds will be traded for a set of four new bonds with maturity dates of 2027, 2029, 2032, and 2037.

“All of these new bonds will have an annual coupon rate of 0% in 2023, 5% in 2024, and 10% from 2025 until they mature. Coupons will be paid out every six months.”

Since the plan was made public, the following groups have come out against it.

National Association of Graduate Teachers (NAGRAT)

Monday, December 5, in Accra, the President of NAGRAT, Angel Carbonu, told the press that his union and other labor unions in the country will stop working if the government goes ahead with its plan.

“We sign a contract saying that I will buy bonds at ‘X’ percent. So, I told the people who will get the money that I bought bonds for them at this rate. All of a sudden, the government, which is on the other side of the deal, says, “This is what I can pay, take it or leave it.”

“This won’t be okay. My union, NAGRAT, and the other unions for teachers don’t agree with this. We are part of a forum of public sector unions, and we want to reassure our members that we will fight this move by the government,” he said.

The Ghana Registered Nurses and Midwives Association (GRNMA)

The GRNMA said in a press release that they were shocked and upset about the proposed Debt Exchange program.

The Association explained why it didn’t like the idea by saying, “Pension funds are made up of contributions from different people.” They are made to protect people who are weak during retirement.

“Therefore, any treatment of “individuals,” as the Minister of Finance said, must be given to all individuals, just like pension funds, such as our GRNMA Fund, which is a Provident Fund for more than 101,000 nurses and midwives.

“Pension funds, especially Tier 3 plans, were told to keep their investments for at least 10 years. Since it started in 2012, most plans have just reached the 10-year mark or will do so next year.

“Debt exchange for pension funds means that workers won’t be able to access Tier 3 funds for 5–15 years. This is just not good enough! According to rules from the National Pension Regulatory Authority (NPRA), most of the assets of all Pension Schemes are in GOG securities,” the statement said in part.

Ghana Medical Association (GMA)

In a statement released on December 6, the GMA said that the debt restructuring program will hurt the pension funds of its members and health care in the country.

“The GMA is also worried about how the debt exchange program will hurt private health care facilities, private health insurance, and mutual funds that have put a lot of money into Government of Ghana bonds.”

“We think this will hurt patient care, the supply of medications, and the way claims are handled,” the statement said.

Trades Union Congress (TUC)

“We paid close attention to what the Minister of Finance said when he said that the Debt Exchange Program is voluntary. The TUC will carefully look into whether or not the pension funds of its members should take part in the program.

In a statement released on December 5, hours after the Minister’s announcement, the TUC said, “We are assuring workers that the TUC and its Affiliate unions will do everything in our power to make sure that our members are fully protected and that not even a pesewa of pension funds is lost in the Debt Restructuring Programme.”

Ghana Chamber of Commerce

“On October 30, 2022, the President of Ghana, Nana Addo Dankwa Akuffo Addo, spoke to the country and promised that “pension funds would not be cut.” A few weeks after this announcement, we are all surprised to see that position take a big U-turn.”

In a statement released on December 6, 2022, the Chamber said, “We have carefully looked over the Minister of Finance’s announcement about the Debt Exchange Program, and we think it hurts the interests of people who pay into pension plans.”

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