Debt Swap Plan Kayoes Dollar, Strengthens Cedi

Ken Ofori-Atta, Finance Minister


THE CEDI has continued gaining strength against the US dollar with the introduction of Government’s debt swap plan.

At the time of going to press yesterday, it was trading at 12.60 to a dollar at the forex bureaux having dropped from 13.60 a day before.

At the interbank level, it traded at 13.15 from 14 at last week’s close after the government announced the debt exchange programme.

The programme has been introduced to enable domestic bondholders to swap their existing holdings for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.

Bondholders thus, would not be subjected to a haircut on the principal, because they would have to accept reduced interest payments, with the debt paying no annual coupon next year, 5% in 2024 and then 10% from 2025 until maturity. Government is continuing its negotiations for a potential $3 billion loan from the IMF, though that is expected to hinge on the country’s ability to improve its debt sustainability, since the domestic bond restructuring would support.

According to AZA Finance, it expects the Cedi to gain further ground against the dollar, potentially strengthening to around the 12 level in the near term.