Depth exchange program: Govt successfully strikes deal with Ghana Insurance Association
The government of Ghana and the The Ghana Insurers Association (GIA)have made progress on the participation of Insurance companies in the Domestic Debt Exchange Programme (DDEP).
This was announced in a joint statement issued on Thursday, January 26, 2023, by the Ministry of Finance and the Association.
According to the agreement, insurance companies will be on similar terms as the banks.
“The insurance companies will participate in the exchange on similar terms as the banks”, the release mentioned.
The statement also indicated that the Government through the solvency window of the Ghana Financial Stability Fund (GFSF), will provide support for the insurance companies that have been heavily affected by the exchange program.
This is to ensure the protection of jobs and stability of the industry.
“The GIA is happy to reach a deal with the Government that protects its members, but also enabling the Government to push through the necessary economic reforms at this
difficult times,” the statement reads
The Ghana Insurers Association (GIA) had requested that insurance companies be exempted from the domestic debt exchange program because 40% of their total assets for the third quarter of 2022 were invested in Government of Ghana Securities, and any attempt to include them in the DDE would be disastrous for the sector.
However, the government, through the Finance Ministry, stated that the insurance industry cannot be exempted.
Following discussions with the Ghana Association of Banks, the Ministry recently revised some terms of the program.
The new agreement encompasses final improvements to the terms of the programme.
These include; an agreement to pay 5% coupon for 2023 and a single coupon rate for each of the twelve (12) new bonds resulting in an effective coupon rate of 9%, clarity on the operational framework and terms of access to the Ghana Financial Stability Fund (GFSF) and the removal or amendment of all clauses in the Exchange Memorandum that empowers the Republic to, at its sole discretion, vary the terms of the Exchange.
Meanwhile, the Association said under the new terms, member banks’ participation is subject to individual banks’ internal governance and approval processes.
Below is a copy of the statement:
