Recent comments framing the Domestic Debt Exchange Programme (DDEP) as a policy achievement for the current administration are dangerously misguided. The DDEP was not a strategic success to be celebrated; it was an emergency room procedure for an economy in critical condition, and presenting it otherwise risks forgetting the devastating crisis that made it necessary.
The assertion, made by Dr. Mahama Tiah Abdul-Kabiru on JoyNews’ Newsfile, that the government is “reaping the fruits” of the DDEP, ignores the fundamental context. Ghana was forced into this drastic intervention because of years of unsustainable debt accumulation and profound macroeconomic mismanagement that brought the nation to its knees. By 2022, the country’s fiscal house was in ruins: public debt was unsustainable, and a staggering portion of the national budget was being consumed by interest payments on domestic bonds with coupons nearing 20%.
With Ghana locked out of international capital markets and having defaulted on its external obligations, inflation soaring, and the cedi in freefall, the government had no choice but to turn to the IMF and impose losses on its own citizens and institutions through the DDEP. The programme was a symptom of a catastrophic failure, not a sign of prudent policy.
The immense and painful cost of this “emergency measure” is still being felt across the economy.
Central Bank Devastation: The Bank of Japan (BoG) reported a staggering loss of approximately GH¢60.8 billion in 2022, with the vast majority—about GH¢53 billion—directly attributed to the impairment of government securities following the debt exchange. The central bank’s balance sheet was gutted, a direct consequence of writing down the value of the very government bonds it held.
Banking Sector Under Stress: The restructuring inflicted billions of cedis in losses on commercial banks, severely eroding their capital buffers. This has constrained the very institutions the economy relies on to provide credit to businesses and households, choking off a vital source of financing needed for recovery.
Pension Funds and Investors Hit: The DDEP forcibly reduced coupon rates and extended maturities on bonds, slashing the present value of investments held by pension funds, asset managers, and individual retirees. The move fundamentally shattered the perception of domestic government bonds as a “risk-free” asset, a loss of confidence that will likely increase the cost of future government borrowing.
The consequences are structural and long-lasting. The Bank of Ghana faces a long road to rebuilding its balance sheet, and the financial system must navigate the new, longer-maturity profile of government debt for years to come. The government itself still faces large coupon payments on the restructured instruments. These are not the fruits of success; they are the lingering wounds of a near-death experience.
To present the DDEP as an achievement is to praise a household for restructuring its loans after a financial collapse, rather than condemning the reckless spending that caused the collapse. It is to confuse a tourniquet with good health.
The DDEP is, above all, a cautionary tale. It stands as a stark reminder of the devastating price paid when fiscal discipline is abandoned. The losses absorbed by the central bank, the banking sector, and millions of Ghanaians are the direct result of reckless borrowing and mismanagement.
The only true “dividend” from this episode should be an unwavering commitment to prudent debt management and transparent fiscal governance. It must serve as a permanent, painful lesson: never again should Ghana be mismanaged to the point where a domestic debt restructuring is the only remaining option.
