As a result of the Domestic Debt Exchange Program (DDEP), Ghanaian banks suffered losses of €7.3 billion instead of the original €41.3 billion.
The report said the losses were reduced because the 22 universal banks, their respective auditors, the Bank of Ghana and the Ministry of Finance agreed on a discount rate of 16-18 per cent as the final terms of the DDEP. The average NPV reduction for government bondholders is approximately 14% (IMF Country Report, 23/168).
This report was conducted by Dr Richmond Atuahene, Mr KB Frimpong and Mr Isaac Kofi Agei.
“Using a 16% NPV discount rate to calculate government debt, the DDEP losses for the 22 banks were £7.3 billion, with foreign banks, domestic private banks and state-owned banks recording losses. It holds approximately 50.6 billion cents of the 87 billion cents restructured from Treasury, ESLA and Durkee bonds.
The report revealed that the face interest rate and redemption period of the restructured bonds are now 9.1% (previously 19.1%) and 8.3 years (previously 13.8 years).
According to the revised losses, foreign banks had a loss of 2.995 billion won, state-owned banks had a loss of 2.377 billion won, while domestic private banks had a loss of 1.911 billion won.
These revised DDEPs had a marginal impact on the solvency and liquidity of both banks, but the significant negative impact on non-performing assets increased from 15% in 2022 to 20% in 2023, it said.
It continued that DDEP’s impairment of GH¢7.3 billion was due to the introduction of expected loss provisions under International Financial Reporting Standard (IFRS) 9 Accounting Standards.
The report added that the marginal losses of Ghana’s banking sector in the revised domestic debt exchange program have cushioned the impact on banks’ solvency and liquidity.
The reduction in the maturity period from 13.8 years to 8.3 years resulted in a 30% net present value loss in 2022, compared to a 14% loss on the 2023 revised DDEP.
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