LABOUR unions in Ghana have requested additional time from the government to assess a proposal put forward on Thursday regarding the restructuring of pension funds valued at nearly 30 billion Ghanaian cedis ($2.7bn). The proposal aims to extend the maturity periods of cedi currency bonds held by the pension funds in exchange for increased interest payments. This move is part of Ghana’s efforts to reduce near-term debt payments under a loan agreement with the International Monetary Fund (IMF).
Abraham Koomson, leader of the federation of labour, expressed some reservations about the government’s promises after the meeting with the Finance Ministry. He stated, ‘There is a certain amount of mistrust of government promises. We need some time as workers’ representatives to engage our constituents on the new proposals.’ Koomson added that a definitive decision could be expected by the end of June.
Initially, the majority of eligible holders of Ghana’s local bonds participated in a domestic debt exchange in February. However, the pension funds were exempted from the exchange after unions threatened to strike. Now, the government has offered the pension funds their own deal.
In the proposal presented to the unions, the government intends to replace old bonds, which have shorter maturity periods and average coupons of 18.5 percent, with new bonds that have longer maturity dates and yield an average of 21 percent. Thomas Kwesi Esso, executive secretary of the lobby group representing the pension funds, said the offer represents an improvement and addresses liquidity concerns associated with the old bonds. He remarked, ‘We have seen the offer, and we think it is better… but we are waiting for organised labour [unions] to have their discussions with the government before we can all make a decision.’
Anthony Yaw Baah, secretary general of the trades union congress, emphasised that the unions will carefully analyse the offer and examine the exchange memorandum document before reaching a decision.
Ghana, a country known for its cocoa, oil, and gold production, is facing the challenge of reducing interest payments amounting to $10.5bn on its external debt within three years. This effort is crucial for successfully implementing its $3bn loan deal with the International Monetary Fund, which is aimed at addressing the country’s worst economic crisis in decades.