President Nana Akufo-Addo has said his government is "very much aware of the impact of the Domestic Debt Exchange Programme on the domestic financial sector", adding that "steps are being taken to mitigate" it.

A recent report by Bloomberg said Ghana’s move to restructure its local-currency and overseas debt has resulted in the first loss on record for two of the West African nation’s top banks.

GCB Bank Plc, the country’s largest lender by assets, posted a 593.4 million cedis ($50.5 million) net loss for the year to end-December, its first since 1993 when Bloomberg said it started maintaining data.

Standard Chartered Bank Ghana Ltd., the biggest by market value, reported a loss of 297.8 million cedis.

Banks operating in West Africa’s second-largest economy have taken a hit of about $1.4 billion, according to Bloomberg calculations, as Ghana restructures most of its public debt, estimated at 576 billion cedis.

The impairments prompted Guaranty Trust Holding Co., Nigeria’s largest bank by market value, to vow to slow lending and bond trading in Ghana.

GCB Bank took a charge of 1.83 billion cedis after impairing its debt securities, while for Standard Chartered Bank Ghana the amount was 173 million cedis.

Ghana’s lenders were allowed a month’s extension to release full-year earnings.

The nation’s debt rose after spending pressures from an energy crisis between 2013 and 2015 and a sweeping banking-sector cleanup in 2018 were compounded by shocks from the Covid-19 pandemic and Russia’s invasion of Ukraine,Bloomberg reported.

As part of the revamp, Ghana exchanged 87.8 billion cedis of local notes that paid an average of 19%, with bonds returning as little as 8.35% — resulting in losses for financial institutions.

President Nana Akufo-Addo’s government has also started discussions with international debt holders as it seeks to finalise a $3 billion bailout from the International Monetary Fund.

The IMF wants Ghana to bring its debt down to 55% of GDP by 2028. Before the government’s interventions, it had been projected to reach 109%.

Speaking at this year's May Day celebration in Bolgatanga, the president said as announced by Finance Minister Ken Ofori-Atta, "we are establishing the Ghana Financial Stability Fund (GFSF) to provide, amongst others, solvency and liquidity support to eligible financial sector institutions, which may be affected by the Domestic Debt Exchange Programme". 

In addition, he said the Bank of Ghana and the regulators in the financial sector space have "provided some regulatory reliefs to support affected institutions". 

The president said "in keeping with our common objective, the government, through the Financial Stability Council, will monitor continuously the impact of the Domestic Debt Exchange Programme on financial institutions to enable it take remedial action, if and when necessary". 

He believes this would ensure that measures put in place to safeguard incomes, deposits, pensions, investor funds and assets are effective.

Read the president’s full May Day speech below:

Address By The President Of The Republic, Nana Addo Dankwa Akufo-Addo, At The 2023 May Day Celebration, On Monday, 1st May 2023, At Bolgatanga, Upper East Region.

It is always a great pleasure to be in the company of Organised Labour on the occasion of the International Workers Day of Solidarity, May Day. Ghanaian workers, ayekoo.

The vice President, who has always been present at May Day celebrations since 2017, has asked me to convey his apologies to you for not being able to make it today. He is welcoming the Prime Minister of one of Ghana’s most important partners, Japan, who is arriving this morning in Accra for a two-day official visit. He is the second Japanese Prime Minister ever to visit our country. God willing, next year, the Vice President will be with us again on May Day.   

Secretary-General, ladies and gentlemen, it is good to be back in Bolgatanga, the city chosen for this seventh May Day celebration of my presidency, and I am happy the leadership of Organised Labour continues to rotate the hosting of this all-important event for workers between the regions. It mirrors the now-established practice of rotating the venue of our Independence Day celebrations. Long may these traditions continue.

Since the onset of COVID-19, whose effects have been exacerbated by the Russian invasion of Ukraine, one of my major preoccupations continues to be the protection of lives and livelihoods. Indeed, this is a responsibility bestowed on me by the Constitution, and I want to reassure you that Government will do whatever it takes to protect your incomes and pensions in these challenging times.

When we met last year at the Black Star Square, in Accra, I assured you of Government’s commitment to protecting the jobs and incomes of workers. Not only did we demonstrate this over the course of the year, but we also proceeded to improve on the existing incomes of workers and pensioners alike.

Organised Labour appealed to Government for the payment of Cost-of-Living Allowance (COLA) for public sector workers to cushion them against the difficult economic conditions. In response, Government and Organised Labour reached an agreement for the payment of fifteen percent (15%) COLA to public sector workers. As a sign of goodwill for workers in the private sector, the National Tripartite Committee agreed to the payment of fifteen percent (15%) Cost-of-Living Allowance (COLA) for them, in addition to the ten percent (10%) upward adjustment of the 2023 National Daily Minimum Wage.

In spite of the difficult challenges Government and employers face, this was made possible through consensus building, to ensure businesses attain high levels of employment to hasten economic recovery. This is no mean feat, as it is the first time in the history of the determination of the National Daily Minimum Wage that the parties agreed to the payment of COLA, after wage adjustment for the year has already been agreed upon. This is an indication of our collective resolve to protect workers and their standards of living.

You would also recall that this year begun with Government and Organised Labour concluding negotiations on the 2023 Base Pay and Pay Point Relativity for Public Sector Workers in January 2023. Following a series of consultations and consensus building within the Public Services Joint Standing Negotiating Committee, the base pay on the Single Spine Salary Structure was increased by thirty percent (30%) over the 2022 figure, effective 1st January 2023. Indeed, the thirty percent (30%) increment of the 2023 base pay is the highest since the introduction of the Single Spine Salary Structure in 2010, and was made possible by the 2.5 percentage point increase in VAT. This increment will help mitigate the difficulties workers are facing, largely arising from the effects of global inflation. I urge Organised Labour to continue to work with the rest of the Tripartite Body to conclude negotiations of public sector salaries and the minimum wage for the 2024 financial year as soon as possible.

On the issue of pensions, Government recognises the challenge posed by low pensions, resulting from the relatively low incomes workers receive during their working life. Because Government is resolved to improve pension payouts, effective 1st January this year, all pensioners on the SSNIT pension payroll, as of 31st December 2022, have had their monthly pensions increased by twenty-five percent (25%). This year’s increase is a significant improvement over the 2022 rate of ten percent (10%), and also the highest increase of annual pensions since 2005, during the time of the Government of another NPP-President, His Excellency John Agyekum Kufuor. All these measures, put together, demonstrate to workers that the Akufo-Addo Government is a listening one, a government which is committed to improving the lot of workers and their dependants.

In the wake of the current global economic crisis, it has become even more imperative to protect workers. Our collective responsibility in achieving this objective is important, and it is for this reason that I consider the theme for today’s celebration, “Protecting Incomes and Pensions in an Era of Economic Crisis: Our Responsibility” as most appropriate.

Secretary-General, Organised Labour, it is evident that this current global crisis is the worst crisis the world has experienced in the past fifty (50) years. In spite of the damaging effect of the crisis, we have managed to protect lives, livelihoods and jobs, and kept the lights on. The crisis is having a profound impact on national economies and societies. Incomes, pensions and investment funds are equally being affected as a result of the multiplier effects of the multi-faceted crisis. Government’s policy responses have been targeted at restoring macroeconomic stability, ensuring debt sustainability from the short-term mitigation options, to addressing the long-term structural challenges, and paving the way for sustainable and inclusive growth and development.

I acknowledge the fact that, over the past few months, the Ghanaian discourse has been dominated by the launch of the Domestic Debt Exchange Programme. I wish to emphasize that participation in the Domestic Debt Exchange Programme, voluntary as it was, was critical for the protection of the economy, and the enhancement of our capacity to service our public debts effectively and create fiscal space for our growth and development. In the midst of the current economic crisis, we cannot risk defaulting in the payment of our public debts, which would attract severe consequences – hence the debt exchange programme.

Despite the back and forth which characterised discussions with stakeholders on the Domestic Debt Exchange Programme, Government is truly grateful for the overwhelming participation of bond holders. The support, cooperation, input and feedback Government received to finetune eventually the Domestic Debt Exchange Programme were unprecedented and reassuring.  

In undertaking the Domestic Debt Exchange Programme, we have been very mindful of its potential impact on pension funds of workers. We will not act in any way to short-change workers in protecting their pensions. It is for this reason that Government, through an MOU signed with Organised Labour on 22nd December 2022, decided to grant exemption to all pension funds in the Domestic Debt Exchange Programme. At the same time, in the MOU, both Government and Organised Labour agreed to work together “to explore mutually beneficial options within debt sustainability limits and to also promote macroeconomic stability and economic recovery in the spirit of social partnership”. In this regard, within global risk management practice, the options should include diversifying the portfolio of pension funds from the current seventy percent (70%) in government paper to real sector investments including rail, housing, urban transportation, motorways and airport as is done by other pension funds.  I am aware that both the Minister for Finance and the Minister for Employment and Labour Relations and their technical teams have been working with Organised Labour/Associations and Pension Fund Managers/Trustees to explore these mutually beneficial options. I would like to use this occasion to appeal to Organised Labour to  work urgently with Government to conclude the discussions within the spirit of social partnership and burden-sharing towards addressing our economic challenges, and providing a stronger base for our rapid growth and development.

We are also very much aware of the impact of the Domestic Debt Exchange Programme on the domestic financial sector, and steps are being taken to mitigate the impact of the Domestic Debt Exchange Programme on the sector. As has been announced by the Finance Minister, we are establishing the Ghana Financial Stability Fund (GFSF) to provide, amongst others, solvency and liquidity support to eligible financial sector institutions, which may be affected by the Domestic Debt Exchange Programme. In addition, the Bank of Ghana and the regulators in the financial sector space have provided some regulatory reliefs to support affected institutions. In keeping with our common objective, Government, through the Financial Stability Council, will monitor continuously the impact of the Domestic Debt Exchange Programme on financial institutions to enable it take remedial action, if and when necessary. This would ensure that measures put in place to safeguard incomes, deposits, pensions, investor funds and assets are effective.

Mr. Secretary General, I agree with Organised Labour when it says “Protecting Incomes and Pensions in an Era of Economic Crisis is Our Responsibility”. This is evidenced by the fact that, over the course of the year, Government has kept every single public sector worker on the payroll. There have been no job losses. Every public sector worker continues to keep his or her job. Even at the peak of the dual global health and economic crisis of the last three (3) years, Government ensured that no public sector worker was taken off the payroll as a result of the crisis. Government’s posture, today, is the same, even in the difficult times we find ourselves. We have demonstrated this through our commitment to increases in the national daily minimum wage, base pay, and pension payments, amongst others, in spite of their fiscal impact on the economy. Indeed, these increments have been made possible because Government is very empathetic towards the people, as it should be, and is very much concerned about their plight and the future of our country. In so saying, I am aware the Ministries for Finance and Employment and Labour Relations are working on the payment to the retirees of 2020. SSNIT has competed the computation, and has forwarded it to the Minister for Finance, who has assured me that it will be effected this year.    

It is important to emphasise that protecting incomes and pensions, in an era of economic crisis, is tied to increased productivity, enhanced revenue mobilisation, effective expenditure management, and, in particular, the effective and sustainable management of the public sector wage bill.

Today, the expenditure on compensation of employees, which comprises wages and salaries, allowances, pensions, gratuities and social security contributions, represents 56.01% of tax revenue, which is higher than the ECOWAS threshold of 35%, creating a serious fiscal crowd-out effect. This calls for immediate steps to increase productivity in the public service, as well as aggressively increase revenue collection by the Ghana Revenue Authority.

Given that growth in public expenditure far outstrips that of revenue, it behoves on Government to bring expenditures, including the public sector wage bill, to sustainable levels. Managing the public sector wage bill in a sustainable manner would inure to the protection of incomes and pensions, as it helps contain inflation. Mr. Secretary-General, we brought inflation to single digits, and sustained it for some time until the global crisis pushed inflation to its current highs. We have brought inflation to single digits before, and we will do it again.

Secretary-General, the quest to diversify the economy for greater macroeconomic outcomes has become more paramount than ever. The current crisis provides an impetus for diversifying trade and production, and exploring alternative income earning opportunities. As you know,  we are committed to the policy of domestic food security and export-driven value addition. It is in our interest to patronise domestic goods and services to hasten economic recovery, create jobs for our peoples, and boost their incomes. Many a time, we overlook the national penchant for foreign goods and services, but are quick to blame Government when it begins to have a toll on our foreign reserves.  Government will continue to do what is within its control. However, consumer preference for goods and services must be deliberately championed by us all.

We must patronise the services of our own, support them to grow, support them to employ our fellow Ghanaians so that, together, we can contribute meaningfully to building the Ghana we all want. I urge everybody here to support the Region by patronising made-in-Ghana products, including food and drinks before departing to your respective destinations. This is one of the ways in which we can protect the incomes of people working and living here in Bolgatanga.

Secretary-General, ladies and gentlemen, dialogue, consultations, engagement in frank and open discussions remain very important routes through reaching consensus and proffering solutions for issues of national development. To this end, I would like to entreat the Tripartite, namely, Government, Organised Labour, and Employers Association to re-activate the Social Partnership Council that was inaugurated in April 2019, but whose mandate came to an end in December 2022. The Social Partnership Council offers a mechanism for building a sense of cohesion, trust, self-management and engagement in frank discussions with mutual sacrifices from all stakeholders to champion Ghana’s development. I am informed Government has already circulated a request for nomination for the reconstitution of the Social Partnership Council to the Tripartite. I call on the Tripartite to provide nominations for the immediate reconstitution of the Social Partnership Council. This is consistent with the Kwahu Declaration, from the National Labour Conference of March 2022, which called for the Social Partnership Council to be strengthened as a platform for building consensus on development policies and programmes.

Secretary-General, ladies and gentlemen, let me touch on a very important subject matter which is the status of the IMF programme negotiations. After achieving a Staff Level Agreement with the IMF in December, 2022 in record time, six months after beginning the negotiations in July 2022, we have continued to work tirelessly to complete all prior actions required to present Ghana’s Programme to the IMF Executive Board for approval. We have also made substantial progress on the debt exchange programme, as well as on our engagements with bilateral creditors to secure financing assurances required for the IMF Programme. We are assured that the next round of meetings of the Paris Club will result in the formation of Official Creditor Committee, inclusive of China, and the provision of financing assurances. The IMF and the World Bank have been very supportive in this journey. With the progress made so far, we expect the IMF Board to consider Ghana’s programme for imminent approval, after the financing assurances are provided. I thank Organised Labour for the role they have played in this journey, especially their inputs into the preparation of the government’s Post COVID-19 Programme for Economic Growth, which underpins the IMF-supported Programme.

We are very confident that the approval of the IMF Programme will contribute significantly to revival of confidence required to drive the successful implementation of the Post COVID-19 Programme for Economic Growth and the key structural reforms for economic recovery and sustained inclusive growth.

Already the progress we have made in securing the IMF Staff Level Agreement, in the debt exchange programme, and the implementation of key structural reforms, are yielding benefits. Inflation is decelerating, interest rates on government treasury notes are declining, the depreciation of the cedi is slowing down, and GDP growth for 2022 has performed beyond expectations. With the successful implementation of the Post COVID-19 Programme for Economic Growth, we expect growth to recover in the medium-term to over five percent (5%). The medium-term growth will be supported by key interventions to support improvements in the business environment and export competitiveness, promotion of entrepreneurship for private sector development, fast-tracking the implementation of key growth-oriented programmes under the Ghana CARES (Obaatan Pa) Programme, transitioning to a digital economy to boost productivity, tax collection, and the formalisation of the economy, and the strengthening of policies to adapt to and mitigate climate change for inclusive growth.  

As I have said, on several occasions, Ghana will emerge stronger from this difficult period. I assure you that, by dint of hard work, prudence and creativity, we will turn things around. We will work to help return our economy to the days of high growth rates, and make our country, again, the best place to do business and the most attractive destination for investment in West Africa, like we were in March 2020, prior to the onset of COVID-19. We are confident of a rapid economic recovery, and my government will not relent in this regard. It is a solemn pledge I am making to you, my fellow Ghanaians, and one which I am determined to fulfill.

Before I conclude, there is a matter of great importance which I must address, and it has to do with the stability of our nation. In times of difficulties, there would be those who would seek to exploit the situation in order to jeopardise the hard-won reputation of our country as a beacon of democracy and stability in Africa, and, indeed, in the world, in order to gratify their personal ambitions. Their ambitions show little or no respect for the capacity of the Ghanaian people to change their government peacefully through the ballot box, something they have done on three (3) separate occasions in the thirty (30) year life of the 4th Republic. The great majority of us, who are committed to democratic values and democratic institutions, must continue to resist the claims of these adventurers, and employ all legitimate means in a democracy to maintain our free, open system of governance, which is respectful of human rights, the rule of law and the principles of democratic accountability.

My Government and I’s respect for fundamental human rights, which are guaranteed by the Constitution of the Republic, includes respect for the right of association, which entitles every citizen to join any lawful association of his or her choice. That includes the right to join trades unions, and, so long as I am President, we will continue to uphold that right. And I will do my part to ensure the completion of the review of the Labour Law. I need the active co-operation of Organised Labour to ensure that the right is respected.

In response to the appeal by the Secretary-General to intensify efforts at bringing peace to Bawku, I want to assure him and, indeed, the nation at large, that there is no higher priority for Government on the agenda of national security than the resolution of the Bawku conflict. Not only are we enhancing, as we speak, the security deployment in the area to promote more strongly the rule of law, and hold accountable all who violate law and order in the area, we are also intensifying the efforts to find a solution to the customary tensions that underline the Bawku conflict, so that, hopefully, a final resolution of that conflict can be attained, just as it has been attained in Dagbon. Nothing will give me greater pleasure, in the concluding days of my presidency, than to help bring lasting peace to Bawku. May God grant me the wisdom to achieve that outcome.

In conclusion, I celebrate you, our gallant workers, once again, for your hard work, selflessness, sacrifice, patriotism and commitment to the development of our beloved nation. Your contributions will be duly recognised and rewarded, and I urge you to remain steadfast and focused in your pursuit of excellence.

On this august occasion, I appeal to all Ghanaians, including Organised Labour, to continue to build on the good rapport and excellent relations that exist among us. The peace we enjoy today should never be taken for granted, and we should cherish every single moment that allows us to advance our development, progress and prosperity, in conditions of peace and stability. I assure you of Government’s utmost support and co-operation.

I thank you for your attention, and congratulations to all awardees.

Long Live Trade Union Solidarity!

Long Live Organised Labour!!

May God bless Organised Labour, and us all, and may God bless our homeland Ghana, and make her great and strong.

I thank you all for your attention.