Debt Exchange Participation Is Impacted By Banks’ Governance: Govt, GAB Reach Agreement

The new conditions for the Domestic Debt Exchange program have been agreed upon by the Ghanaian government and the Ghana Association of Bankers (GAB).

The GAB issued a directive instructing commercial banks not to accept the updated debt exchange offer due to the uncertainties surrounding how the debt restructuring would affect the banking sector.

In a letter to bank managing directors, the association requests that its issues be resolved before accepting the debt swap offer.

In light of this, GAB advised member banks to officially notify the association first before considering the debt swap in its present form.

However, following a meeting with the Ministry of Finance, the Association of Banks announced that under the amended rules, member bank involvement is subject to internal governance and approval procedures specific to each bank.

“…From the uncertainty surrounding the program, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD/CEO must inform the CEO of GAB directly of the decision,” according to the letter sent to the banks.

“This is a significant milestone towards addressing our economic challenges, and will thus help to restore macro-economic stability and accelerate Ghana’s economic growth.

“With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders,” the Finance Ministry and GAB highlighted in a joint statement.