News Guide Africa

Tag: Government

  • Airtel-Tigo Debt: Gov’t negotiating haircut, cash payment reduced to US$10m


    “Minister Sam George reveals details of Airtel-Tigo’s US$400m debt restructuring during a press briefing in Accra.”

     

     

    Adnan Adams Mohammed

     

    Government of Ghana is negotiating with ATC over a mounting debt inherited for acquisition of Airtel-Tigo by the previous NPP administration for a ‘haircut’ arrangement.

     

    The debt, which stands at US$ 400 million has been reduced to US$ 200 million, but with a cash payment component of US$ 10 million which is to be paid over a period of time, the Minister for Communications, Digital Technology and Innovation, Samuel Nartey George has revealed.

     

    However, the company continues to face financial challenges, with monthly operating losses amounting to GH¢20 million as the Minister has criticized the previous government’s acquisition of Airtel Tigo, which was rebranded as AT, for a reported purchase price of US$1. He described the decision as “ill-informed and reckless,” highlighting that the company had a debt portfolio of US$400 million at the time of purchase and lacked sufficient revenue to cover its overhead costs.

     

    “The previous government acquired Airtel Tigo and rebranded it as AT with a reported purchase of US$1. Nothing could have been more disingenuous and unpatriotic. When the company was bought its debt portfolio stood at US$400million and its revenues could not meet its monthly overheads”, Sam George told journalists at a Meet-the-Press event in Accra, last week.

     

    “The core and dealing platforms have reached the end of life and neither Bharti, which operated Airtel, nor Milicom, which operated Tigo, had failed to make any meaningful investments in both companies over the preceding five years.

     

    “The decision to step in at the time can best be described as ill – informed and reckless. It was an abdication of responsibility by the then administration and minister to the best interest of Ghana.”

     

    “…Today after a debt restructuring arrangement, the debt portfolio at AT sits at about US$200million, rising every month as the company makes a monthly operating loss of GHc20million.

     

    “The bleeding needs to be stopped and urgent steps are underway to engage the company’s creditors in negotiating haircuts to ensure the company’s viability,” Sam George stated.

     

     

  • Ghanaian pensioner Eurobond holders plead for exemption amid debt restructuring hardship

     

    Ghana’s Eurobond Debt

     

    A group of pensioner Eurobond holders in Ghana has expressed profound disappointment and frustration over government’s Eurobond debt restructuring plan, following recent remarks by the Finance Minister.

     

    The pensioners, feeling excluded from key negotiations, voiced their concerns after the Minister announced that Eurobond investors had forgiven USD5 billion of Ghana’s debt.

     

     

    The pensioners argue that while negotiations have focused on international and commercial bondholders, they have been left out of discussions, despite being significantly impacted by the restructuring.

     

    They contend that unlike larger institutional investors, they cannot bear the severe financial losses imposed by the government’s current debt restructuring plan.

     

    The restructuring involves a 37 per cent haircut, reduced interest rates, and extended maturity dates that stretch up to a decade. For the pensioners, these measures are devastating.

     

    The bonds, which they had relied upon for financial security during their retirement, are now at risk, particularly affecting their ability to cover essential expenses such as medical care.

     

    “We, the affected pensioners, write to express our deep disappointment and frustration with this turn of events,” the group said in a statement.

     

    It continued that: “At our age, and being on retirement, the 37 per cent haircut, reduced interest rates, and longer tenor will affect us adversely, resulting in significant financial losses which we can hardly afford.”

     

    For the past two years, these pensioners have endured zero interest payments on their bonds, exacerbating their financial hardship.

     

     

    Despite multiple letters and appeals to the Finance Ministry, they have yet to receive a response. Now, they are pleading for an exemption from the Eurobond restructuring plan, citing their vulnerability as retirees.

     

    Among their key requests are an exemption from the Eurobond restructuring for pensioners and other vulnerable groups and exploration of alternative solutions that protect their financial stability.

     

    The pensioners, though a small group, stress that their plea is reasonable given their limited resources and the harsh terms of the restructuring.

     

    They are urging the government to reconsider its stance and adopt a fairer approach that does not further compromise their financial wellbeing.

     

     

  • Gov’t to maintain fiscal discipline and stability amidst Dec. elections.

     

    IMF

     

     

    Adnan Adams Mohammed

     

    The Ghana government has assured its steadfast commitment to fiscal discipline and responsible spending inspite of pending elections on December 7, 2024.

     

    The government through the Finance Ministry has underscored the importance of maintaining economic stability and pursuing sustainable growth amid the upcoming political season.

     

    Ghana has a track record of managing budget overrun with huge deficits in every electioneering year. This phenomenon has become a cyclical event under every government thereby plunging the country into financial and macro and micro economic constraints. But, addressing journalists at a joint International Monetary Fund (IMF) and MoF press conference, the finance minister is optimistic of breaking the jinx.

     

     

    “Despite the fact that 2024 is an election year, we are committed to enhancing domestic revenue mobilisation and tightening expenditure commitment controls to avoid policy slippages,” Dr Mohammed Amin Adam asserted.

     

    The IMF Board’s has approved the second review of Ghana’s US$3 billion programme, which has led to the immediate release of US$360 million, bringing total disbursements to US$1.56 billion.

     

    The Finance Minister highlighting government’s approach to change the status quo indicated: “We are committed to sustaining our macroeconomic policy adjustment and reforms to fully restore macroeconomic stability and debt sustainability while fostering a sustainable increase in economic growth and poverty reduction.”

     

    Dr. Amin Adam outlined government’s strategic focus on enhancing domestic revenue sources and implementing stringent controls on public expenditure.

     

    This strategy aims to prevent any policy deviations and ensure that economic policies are effectively maintained through the election year.

     

    “This approach is crucial to maintaining economic stability,” Dr. Amin Adam asserted. “We must ensure that our policies are not derailed by the political calendar and that we continue to work towards achieving comprehensive macroeconomic stability and sustainable growth.”