UGBS Professor of Finance, Godfred Bokpin Commends Government’s Latest DDEP Payment for Restoring Market Confidence
A Professor of Finance at the University of Ghana Business School (UGBS), Prof. Godfred Bokpin has commended the government’s recent payment of GH₵9.541 billion to bondholders under the Domestic Debt Exchange Programme (DDEP), stating that it could help restore investor confidence in Ghana’s local bond market. This was captured in the Daily Graphic on 19th February 2025. Prof. Bokpin, along with Dr. Said Boakye, an economist and Executive Director of the Institute of Fiscal Studies, noted that the consistent payment pattern, coupled with the goodwill enjoyed by the current administration, could play a crucial role in reviving the domestic financial market, which had been largely dormant since the introduction of the DDEP.
According to Prof. Bokpin government’s commitment to regular coupon payments would help consolidate the market confidence necessary for economic stability. “We have seen some goodwill being restored. In the run-up to the election, particularly in November, the government struggled to meet its treasury bill targets. However, following the change in government, there has been a notable uptick, even leading to oversubscription,” he explained.
He further noted that the latest payment signalled the government’s dedication to meeting its financial obligations, which could have a positive impact on the local bond market. He cautioned that the Sinking Fund also comes with an opportunity cost. “Funds allocated to the Sinking Fund could have been invested in other development projects. However, under the current circumstances, it is necessary to consolidate confidence in the market,” he explained. With limited access to international capital markets, he emphasised the importance of reopening the domestic bond market to enable the government to secure medium to long-term financing for national development.
Dr. Said Boakye however advised the government against a hasty return to the local bond market. While acknowledging that the bond market offers better financing options compared to treasury bills. He stressed the need for the government to prioritise revenue generation over borrowing. “The government must reduce its reliance on loans and focus on expanding revenue sources to finance its budget. Although continuous repayments are good for restoring credibility, caution must be exercised in re-entering the market too quickly,” Dr. Boakye cautioned.
As part of efforts to restore debt sustainability, the government launched the DDEP in 2022 to restructure its domestic debt. Through this programme, old bonds were swapped for new ones worth GH₵82 billion, featuring reduced coupon rates and extended tenors. Since then, the government has made four coupon payments to investors who incurred significant losses during the restructuring. The first payment in August 2023 totalled GH₵8.55 billion, followed by GH₵9.11 billion in February 2024 and GH₵9.35 billion in August 2024. The latest disbursement of GH₵9.541 billion, made following a directive from the President, comprises GH₵6.081 billion in Principal Interest Capitalisation (PIC) and GH₵3.46 billion in Payment-In-Kind (PIK). Looking ahead, the government has allocated GH₵9.7 billion to the Debt Service Recovery Cedi Account (Sinking Fund) to cover upcoming payments in July and August 2025.