Vice President for Chartered Insurance Institute of Ghana, Yvonne Osei Addo, has urged government to increase information on sustainability fund to avoid default.
According to Mrs Osei Addo who spoke to Samuel Eshun on the Happy Morning Show, insurance companies who would be affected by government’s debt restructuring policy are ignorant of the modalities it comes with hence can’t work with it.
“I have heard the banks has come into conclusion but we still don’t know the modalities surrounding the sustainability fund. We need further explanation” she mentioned.
She mentioned that,”35 % of the industry asserts is in bonds. During recapitalization they said bonds won’t be discounted and we were mandated to invest in bonds so a lot of our money is in bond” she said.
“It is with these returns that we put people in the position they were before they started the bond but now that the returns are not coming we are unable to pay our claims” she furthered.
She maintained that the commencement of the debt restructuring would affect them immensely, hence it would be appropriate government increases details of the sustainability fund in order to relieve them of profit lose.
The government has revised some terms of its Domestic Debt Exchange Programme (DDEP) following discussions with the Ghana Association of Banks.
Hitherto, the new bonds under the programs were not to accrue any interest until 2024, starting at 0% coupon in 2023 which steps up to 5% in 2024 and 10% from 2025.
But after the engagements between the bankers and the Ministry of Finance, bondholders will now enjoy a 5% coupon in 2023.
This also translates into an effective coupon rate of 9% according to a joint press release by the Finance Ministry and Ghana Association of Banks.