The Central Bank of Ghana has made it known that it would have been extremely difficult to secure a bailout from the International Monetary Fund (IMF) without implanting the Domestic Debt Exchange Programme (DDEP).

Speaking on behalf of the bank, Dr. Philip Abradu-Otoo, the Director of Research at the Bank of Ghana (BoG) listed some of the challenges the government would have encountered in securing the loan facility without the DDEP.

“The biggest one was the impairment we had on the securities that we were holding. Just like any other individual, the BoG was also holding government securities. Out of that GH¢60.9 billion, GH¢48 billion of that were impairment. That is the losses that we incurred on our books, as a result of the DDEP.

“For the debt exchange programme, nobody had a haircut on the principal…for the BoG, we had the side haircut, and top haircut and the amount itself was cut into two. We had three, we had to do that because we needed that to secure the IMF programme. It would have been tough to move forward very fast. Then we would have come back to the drawing board and relook at the other parts of the DDEP,” he explained in a report on citinewsroom.com.

When asked if the BoG would have disagreed with the impairment if given the choice, he confirmed, “Yeah”.

To stabilise the economy, the government initiated the IMF programme and introduced the DDEP, which resulted in some bondholders experiencing a reduction in their investments and coupons.

In 2022, the BoG reported a loss of GH¢60.9 billion due to impairments that occurred during the domestic debt exchange programme.

EAN/NOQ

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