Gov’t will pay GH¢10bn in DDEP pastime, alerts sturdy fiscal well being – Life Pulse Daily

Introduction

In a significant development for Ghana’s economic trajectory, the government has announced the completion of a GH¢10 billion coupon payment under the Domestic Debt Exchange Programme (DDEP). This transaction, executed on February 18, 2026, marks the sixth coupon settlement under the programme and is notably the second payment made entirely in cash, without any Payment-In-Kind (PIK) component. The announcement, reported by Life Pulse Daily, is being framed by officials as a powerful demonstration of the nation’s strengthening fiscal capacity and a pivotal step in its broader debt consolidation strategy. For a country that has navigated a severe debt crisis, this milestone transcends a mere financial transaction; it is a critical signal to both domestic and international stakeholders about the efficacy of Ghana’s debt management and its commitment to sustainable public finances. This article provides a detailed, SEO-optimized analysis of this payment, unpacking its context, implications, and the road ahead for Ghana’s economy. We will explore the mechanics of the DDEP, analyze the strategic importance of an all-cash settlement, assess the impact on key financial sectors, and offer practical insights for investors, businesses, and observers monitoring Ghana’s fiscal health.

Key Points

Background: Understanding Ghana’s Debt Crisis and the DDEP

The Genesis of Ghana’s Debt Crisis

To appreciate the significance of the GH¢10 billion payment, one must first understand the precipice from which Ghana has been climbing. By late 2021 and into 2022, Ghana faced a classic sovereign debt crisis. Years of fiscal deficits, exacerbated by global shocks like the COVID-19 pandemic and the Ukraine war, had pushed public debt to unsustainable levels, exceeding 80% of GDP. Servicing this debt consumed a massive portion of government revenue, crowding out critical spending on infrastructure, health, and education. The situation reached a breaking point in late 2022 when the government suspended payments on most of its external debt, triggering a formal restructuring process under the G20 Common Framework. Concurrently, the domestic debt stock, largely comprising bonds held by local banks, pension funds, and individuals, required urgent attention to prevent a systemic crisis in the financial sector.

Designing the Domestic Debt Exchange Programme (DDEP)

Launched in early 2023, the Domestic Debt Exchange Programme (DDEP) was the government’s primary tool to restore debt sustainability on the home front. Its core objective was to exchange old, high-interest, short-to-medium-term bonds for new, longer-dated instruments with lower coupons, thereby extending the maturity profile of the debt and reducing immediate financing pressures. The programme was not a “haircut” in the traditional sense (where principal is reduced) but a debt restructuring focused on tenor extension and interest rate reduction. It involved the exchange of approximately GH¢130 billion in eligible domestic securities for a suite of new bonds maturing between 2027 and 2037, with step-down coupon rates. The success of the DDEP was contingent on achieving very high participation rates (over 95% was targeted) to ensure the new debt profile was viable. Its implementation required delicate negotiations with powerful domestic stakeholders, including the Ghana Association of Banks and the National Pensions Regulatory Authority, whose institutions were the largest holders of the old bonds.

Analysis: Deconstructing the GH¢10 Billion Payment

Cash Payment vs. PIK: A Strategic Shift

The specific nature of this GH¢10 billion payment—as the second all-cash coupon under the DDEP—is a critical detail. The initial post-restructuring coupons included a Payment-In-Kind (PIK) option, where a portion of the interest could be capitalized (added to the principal) rather than paid in cash. This was a concession to the government’s immediate liquidity constraints during the deepest phase of the crisis. The transition to full-cash payments signifies a profound shift. It means the government is now generating sufficient domestic revenue, primarily through tax collections and improved economic activity, to meet its debt obligations in hard currency (cedis) without deferring payments. This fiscal discipline directly reduces future rollover risk and compound interest costs. For bondholders, especially income-dependent entities like pension funds, cash payments restore predictable cash flows, which is essential for meeting long-term liability payments. The move from PIK to cash is a clear, quantifiable metric of improving debt sustainability.

Stabilizing the Financial Ecosystem: Banks and Pension Funds

The domestic debt restructuring fundamentally altered the balance sheets of Ghana’s financial institutions. Banks and pension funds saw the value and yield of their vast holdings of government securities reset. The immediate impact was a hit to profitability (lower interest income) and, in some cases, capital adequacy. The consistent payment of coupons in cash, however, provides crucial stability. For banks, it ensures the government remains a reliable, low-risk counterparty, which is vital for maintaining liquidity in the interbank market and for meeting regulatory requirements. For pension funds, which are mandated to hold a significant portion of assets in government securities, timely cash coupons are non-negotiable. They rely on this income to pay monthly pensions to retirees. The GH¢10 billion payment, therefore, is not just a government transaction; it is a systemic support mechanism for the entire financial sector stability in Ghana. It mitigates the risk of a balance sheet crisis in these institutions, which would have far-reaching contagion effects.

Macroeconomic Tailwinds: The Enabling Environment

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