Ofori-Atta said in a video address on Sunday that the Ghanaian government had completed its debt sustainability analysis, but he did not provide any information on external debt plans which are eagerly awaited by international creditors.
“We are confident that these measures will help restore macroeconomic stability,” he said.
As part of the domestic debt swap, local bonds will be swapped for new maturities in 2027, 2029, 2032 and 2037 and their annual coupon will be set at 0% in 2023, 5% in 2024 and 10% in 2025 until their maturity.
The government is in talks with the International Monetary Fund for a support program aimed at relieving its over-indebtedness.
The local currency, the cedi, fell more than 50% against the dollar in 2022, while the central bank raised its main benchmark rate to 27% last Monday after inflation hit a 21-year high in october.
Ofori-Atta said the government wanted to minimize the impact of the debt swap on retail investors and would therefore not apply the conditions to treasury bills or individual bondholders. There will also be no haircut on the principal of the bonds, he said.
“This should…reinforce expectations that Ghana is on the path to an IMF staff-level agreement. We expect the Ghana cedi to benefit,” said Razia Khan, chief economist for Africa at Standard Chartered.
“There was no doubt that Ghana needed LCY (local currency debt) coupon cuts to restore macroeconomic sustainability. By excluding retail investors, this will likely be more politically palatable,” she added.
The impact of the plan on individuals remains to be determined, as many hold bonds through mutual funds and pension funds.
Ofori-Atta said the government would set up a financial stability fund with support from development partners to help domestic financial institutions, including banks and pension funds, cope with the swap.
“I tell you, nothing will be lost, nothing will be missed and nothing will be broken. Together we will get it all back,” he said.
(Additional reporting by Rachel Savage; Writing by Alessandra Prentice; Editing by Alexander Smith)
By Christian Akorlie and Cooper Inveen