Analysts raise doubts over govt’s 85% participation rate in DDEP


Barely 24 hours after the government announced that it has achieved approximately 85 percent success rate in the Domestic Debt Exchange Programme (DDEP), some watchers of the space have raised doubts over the government’s claim.

During the launch of the Domestic Debt Exchange Programme in December 2022, the Minister of Finance, Mr Ken Ofori-Atta, said holders of domestic instruments were being invited to voluntarily exchange approximately GH¢137 billion of domestic notes and bonds for a package of new bonds to be issued.

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The amount was subsequently reduced to GH¢130 billion.

However, in a statement to confirm the official closing of the Exchange Programme, the Finance Ministry revealed that it has successfully swapped GH₵‎82,994,510,128 worth of old bonds from a possible GH₵‎ 97,749,624,691 under the domestic debt exchange programme.

According to government, the amount represents an 84.91% success rate exceeding its intended target of an 80 percent participation rate.

This revelation has caught the attention of some financial analysts who are asking questions about the government’s participation rate.

Economist and Political Risk Analyst, Dr Theo Acheampong in a post raised doubts about the figures presented and further wondered if the government was being transparent with its accounting to Ghanaians.

“Folks, there’s a funny accounting gimmick being deployed by the government to make it look like the govt got 85% when in fact when the initial DDE amount of GH¢137 billion is considered, the actual exchange amounts to 61%, as many of us highlighted from the get-go! In paragraph 5 of the press release, the govt has decided to deduct (a) amounts of Eligible Bonds held by persons that are not Eligible Holders and that were not eligible to participate in the Exchange; and (b) amounts held by persons that following the announcement of the Exchange converted their Eligible Bonds to treasury bills.

“Basically, the conversion to T-bills means that the govt has an even bigger short-term payment obligation as these instruments have bigger interest rates (coupons) than many of the eligible bonds. You trust these guys at your peril! Alo moves nkoaaa! This one is tantamount to misleading the markets ooo. Could be punished if it was a company/corporate organisation, but alas this is a sovereign govt! It was the government that said in clear/unequivocal terms that it was restructuring GHS137bn but suddenly at the last hour after everybody has tendered in that, it says it has changed its mind and is now only restructuring GHS97.7bn. What be our own?”

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The vice president, in charge of research at IMANI Centre for Policy and Education, Bright Simons also suggested that claims by the government that it has achieved an 85 percent participation rate may not be entirely accurate.

In a lengthy article, Bright Simons stated that at best using the initial GH¢137 billion of bonds that were tradeable, the government has only achieved a 60 or 61 percent participation.

“First, using a more expansive bracket of government marketable securities (such as what was indicated in the debt exchange memoranda) as the denominator, one obtains a participation rate of between: 83 billion GHS (new bonds)/137 billion GHS (original eligible debt) = 60% or 83 billion GHS (new bonds)/130 billion GHS (in-program amended eligible debt) = 63%. So, analysts’ projections of a rate between 60% and 65% is far more robust than the government’s preferred 85%.

“Well, review the government’s own conduct following the last deadline of the exercise. One day to the final deadline, a junior Minister announced a participation rate of 50%. Once this was reported by the Press, friendly journalists were immediately briefed undercover to start circulating a new number of 70% plus. The junior Minister was promptly instructed to stop commenting further. Government affiliates in the media then took over the narrative. This morning, the number became “over 80%”. It has finally alighted at 85%. Clearly, there would be no need to go through all these hoops if the narrative didn’t matter to the government.

“The universal and enthusiastic reporting of the “over 80%” and “85%” participation rates in the mainstream press without any of the nuances above is clear evidence that the participation narrative matters greatly to the government and its key audiences.

“For more specialised observers however (the ones most likely to pay attention to the kind of detail often explored in these pages), a more accurate number matters for its sharper reflection on the evolving fiscal picture.”


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