The University Teachers Association of Ghana (UTAG) has expressed its opposition to government’s newly proposed alternative offer to include pension funds in the ongoing debt restructuring.
Government has said, the decision to include pension funds in the programme is aimed at alleviating the cash constraints on the government in the coming years, while fully compensating the Pension Funds for the value of their current holdings.
But in a memo, UTAG said any move to add pension funds in the debt restructuring programme will overburden its already poor members.
“We are still unable to participate in any intervention that would worsen the plight of the already impoverished Ghanaian University Lecturer. We therefore write to unequivocally reject the request to use our Pension Funds i.e GUSS, SSNIT and any other pension fund that affect our members for the new alternative proposed offer by government.”
“his request by the government comes after organized labour fiercely rejected the inclusion of pension funds in the Domestic Debt Exchange programme.
“We warn that governmental intransigence in this matter would not be countenanced as we are willing to fight to ensure that no one robs our members of their pensions funds”, UTAG added in its statement.
What Finance Minister has been saying
The Minister of Finance, Ken Ofori-Atta had explained that the proposal has been “crafted to facilitate the execution of the MoU, addressing the Government financial needs while maintaining the value of the pension funds.”
“The proposed offer entails exchanging your current holdings of Treasury Bonds, ESLA bonds and Daakye Bonds for a menu of the currently outstanding New Bonds (issued in February 2023 and maturing in 2027 and 2028 respectively. New Bond 2027 and New Bond 2028 featuring an average coupon of 8.4 % with a ratio of 1.15x, thus entailing an increase in patrimonial value.”
“This complemented by an additional cash payment of 10% (strip coupon). The stream of coupons to be received as part of this proposal will therefore be 21% compared to the current 18.5% of the outstanding old bonds,” he added.
He further indicated that “in 2023 and 2024, both instruments will pay 5% coupon in cash and the remainder will be capitalized into the nominal amount of the two bonds in order to comply with the cash constraints and the macro-framework defined under the programme with International Monetary Fund (IMF).”
He says the alternative offer has been designed to “(i) achieve the same average maturity as pension funds current holdings of the old bonds (currently between 4 and 5 years), (ii) achieve a similar average coupon (currently at 18.5%) while(iii) alleviating the cash constraints for the government over the first two years.”
The Finance Minister thus urged the Board of Trustees of pension funds to consider the proposal, indicating that “government is targeting to settle the offer by end of April 2023.”