That the savings appetite among Ghanaians is low is a known
fact. In Ghana, the impounding of people’s property and assets during military
regimes and the recent banking sector clean-up, which led to a vast majority of
people losing their savings, have had a significant impact on savings culture.
Households and firms view conventional bank accounts as unsafe and hold savings
in less conventional places. Before
finding a solution to the poor savings culture, a third factor has been thrown
into the fray to worsen the situation.
It is the so-called
debt exchange programme regarding Government- issued local currency bonds which
the Government announced in December, 2022. This articles looks at the
strenuous efforts being made by Government to coax individuals and institutions
to sign on to the programme. Most significantly, the article discusses the
sovereign immunity clause in the debt exchange document that seeks to limit
bondholders’ ability to execute any judgment against the State in
case they opt out of the debt exchange programme and sue for their money.
The article concludes
that, by taking such a position intended to limit bondholders’ ability to
recover their money, the State is only stroking its underarms and giggling. The
State shed its sovereign immunity and entered the marketplace, borrowed money
and did business just like any individual or institution. And now that it is
time to fulfil its part of the contract, the State proposes to put on its
sovereign immunity garb to escape from its accrued responsibility towards its
bondholders. One cannot think of a worse case of fraud and an affront to public
We were around, being bitten by a super inflationary rise in
fuel prices - the prime mover of all other inflationary pressures. For those of
us not well-versed in the fine intricacies of macro-economic doublespeak, the
daily increase in prices of goods and services became our econo-barometer for
measuring the decreasing worth of the money in our purses and pockets.
Whiles trying to
figure out what was happening in our economy that has been targeting
single-digit inflation since I was in nappies, a new expression came to town:
No haircut. When I first heard it from the 1st Gentleman of the land, I felt
relieved. Why? Because, though it sounded comical coming from a bald fellow, it
gave respite to many a confused soul. Whatever it meant.
But then the Finance
Ministry came out with the 2023 budget and the Minister announced that there
will be a haircut. Then hell broke loose. Out came all manner of hitherto
unheard of experts, doctors, professors, financial consultants, and spent
think-thankers. They spoke of how broke Ghana was and how citizens were going
to lose their lifetime savings and investments. It is to their eternal credit
that their discussions woke the entire citizenry up to the reality of the day.
Simply put, as the
experts explained, the haircut meant that the Government was going to cream off
part of citizens savings and investments to pay off Government’s debts. Most of
us thought that explanation was a figment of political detractors’ imagination.
As it happened, it was real. So, just like the ‘’ song, ‘’ also entered the
hymnal to be used in the National Cathedral.
The Ministry of
Finance then announced that citizens who have lived lives of poverty like the
parson in Geoffrey Chaucer’s “The Canterbury Tales” must give their lifetime
investments to Government. We were cajoled to bring our benevolent and
patriotic selves to the fore by signing on to a “debt exchange programme.”
Ordinarily, one will expect that if there is a contract between two parties and
there is the need for a change in the terms, the parties must meet and discuss.
And agree on what each party wants. And then make an exchange of one thing for
But in our peculiar “exchange,”
it is Ministry of Finance that sat down and unilaterally decided that, no
principal and interest will be paid on all investments in Government bonds in
2023. Again, persons who have bonds maturing in 2023 will happily receive 2% of
their investment as “cash tender fee” - basically, a balm to soothe their raw
wounds – if they sign on to the debt exchange programme. In ordinary
mathematics, if, for example, you have Government bonds worth GH₵10,000
maturing in 2023, the Government will magnanimously pay you GH₵200 to take care
of yourself and your family in the years 2023, 2024, 2025 and 2026. Never mind
that the interest payment on the amount of GH₵10,000 at the agreed rate of
20.75% a year will yield GH₵2,075 in 2023 alone.
Furthermore, by the terms
of Government’s debt exchange programme, those who own bonds that are maturing
in 2023 will receive their money in tranches of 15% and 14% a year over a
period of seven years – starting from 2027 and ending in 2033.
Now, for bonds maturing from
2024, bondholders will be paid in single digits of 9% and 8%. And mark this:
The single digit payments will only start from 2027 and end in 2038. Thus,
the Government will pay the bondholders their money due in 2024 (and beyond)
over a period of 12 years. Consequently,
every bondholder who happens to live long enough to see the completion of our
“Holy Sepulchre” can only hope to go and make supplications to the Lord in the
With regards to
interest that will be paid on the new bonds, interest on each new bond will
start accruing at 5% from 2024. It will be increased every year at various
rates. Thus, bondholders will not enjoy the interest rates they were given at
the time they bought their bonds.
From government officials’ narratives and ‘experts’ media
analyses, Ghana is unable to pay its debts because we have borrowed too much.
And we don’t have the money to repay our debts. The International Monetary Fund
( the ‘IMF’), - the capitalists’ tool for developing countries’ eternal misery
that we love to hate in peace times and hate to love in crises period - is here
again. What Ghana needs from the IMF is US$3 billion. The conditions set by the
IMF include the requirement that Ghana must lower her debt to GDP ratio. Seeing
that she has borrowed herself into penury, and has no appetite to change its
ostentatious lifestyle, Government decided to take the line of least
resistance: we won’t pay our debts to bondholders. Simple and sweet.
But how did we get
here? It will be recalled that Ghana issued her first Eurobond sometime in
2007. The late Mr. Baah Wiredu, as then Finance Minister, would not let us
rest. He did massive public education on the bonds. He told us what the
Government intended to do with the borrowed money, the interest rate, the
duration for repayment, etc. Between 2009 and 2016, if my memory serves me,
there were two such bonds issued. Again, there were discussions in the periods
leading up to the issuance of the bonds. The discussions were mainly led by Mr.
Seth Terkper, as Deputy Minister and later, Minister of Finance.
Come 2017 and beyond.
Floating Eurobonds and local Government Cedi bonds became almost as rampant as
issuing local treasury bills. Just like treasury bills, Government did not feel
itself obligated to explain the purpose for the incessant borrowing. Not much
discussions preceded or accompanied the issuances. We were borrowing billions
of cedis and dollars at humungous interest rates. Some concerned citizens
complained and they were rebuffed. Some citizens petitioned CHRAJ to intervene. They
got no head way. Some even went to the Supreme Court and they were thrown out.
It appears most of the
cases the courts have dismissed have come back to haunt us. Take l. In
that case, the Supreme Court was able to propound a theory that posited that,
centenarians and other dinosauric creatures can be appointed by Government as
“public officers.” Mr. Amidu, then aged 67 years, went back to serve his
country as a public officer. But later events showed that, both Mr. Amidu and
the Government would have been better off if the Supreme Court had dissolved
their special prosecutorial matrimony when the opportunity presented itself.
Again, if we had paid optimum attention to the main issue of government
borrowing in perhaps
we would have been having a different conversation today.
The Government’s unilateral change in the contract terms of its
bondholders, called ‘exchange,’ has taken euphemism to an extreme as it is. But
far worse is the Ministry of Finance’s veiled threat that those who do not
voluntarily agree to give their investments in Government bonds to Government will
not be able to execute any judgment against the Republic of Ghana. According to
the Ministry, Government will exercise its sovereign immunity over certain
classes of its assets against execution. So,
any bondholder who refuses to sign onto the debt exchange programme and sues to
recover their money cannot seize any property of our embassies abroad to pay
the judgment debt. Secondly, the bondholder cannot seize any assets belonging
to Ghana’s military or defence forces to satisfy a judgment debt. Thirdly, a
bondholder cannot attach ministries and other government properties in
execution of a judgment. But government assets that are for commercial use can
be attached to satisfy a judgment debt against the Government, according to the
debt exchange document. The fourth point is that, money in the Government’s
Petroleum Fund cannot be attached to satisfy any judgment that may be given in
favour of a bondholder.
At first glance, many
bondholders, especially individual bondholders, may panic into believing that,
those who do not sign on to the debt exchange programme will have no recourse
for relief. It appears the Government can, and will use its sovereign immunity,
to run away from paying bondholders who opt out of the beleaguered debt
exchange programme. That is not the case. Bondholders who refuse to take part
in the debt exchange programme can sue and execute their judgment against the
Government as will be demonstrated shortly.
To all intents and purposes, it is foreign bondholders/investors
who are likely to fall on the assets of a) Ghana’s embassies and missions
abroad and b) Ghana’s military assets abroad. So, well, Government may try its
luck in invoking its sovereign immunity against attachment of such assets with
regards to its foreign investors who may sue Ghana abroad. It
will be interesting to see how foreign courts will treat Ghana’s claim to
sovereign immunity against execution of judgment obtained for breach of
We heard of Ghana’s
‘roadshows’ abroad to garner investor interest in Government’s bonds and other
investments. It is doubtful whether Ghana warned potential investors that,
though it had shed off its sovereign shackles and descended into the arena of
commerce, it will sport the sovereign immunity garb again when the price was
right. We can only wish the national legal team well in their future defence
endeavours in foreign courts.
As regards Government’s
military assets, we may sit pretty, secure in the knowledge that no foreigner
will enter Ghana and seize Burma Camp and put it up for auction sale. Even so,
the Government has a big lesson to learn from the case. This is a
case about an Argentinian Government military ship that was arrested sometime
in 2012 when it made a brief stopover in Tema. The ship was arrested by an
order that was obtained by the judgment creditor from the High Court, Accra, in
execution of a judgment debt that the Government of Argentina had failed to
pay. The case was about government bonds Argentina issued and refused to pay
the bondholders! The facts of the case are that, in 1994, the Republic of
Argentina (simply called ‘Argentina’) entered into an agreement with a US company to issue bonds for
sale to the public. A company called NML Capital bought some of the bonds
issued by Argentina. Argentina could not pay when the bonds matured so NML
Capital sued Argentina in New York and got judgment. Argentina did not pay
the judgment debt.
In 2005, NMC Capital
sued Argentina on the judgment debt in the High Court in England.Argentina complained that the English High Court did not have
jurisdiction over the case since Argentina had state (sovereign)
immunity. The issue went before the English Supreme Court which held that,
Argentina did not enjoy state immunity in relation to the case and the English
High Courts had jurisdiction. Argentina had no escape route so she submitted to
judgment and a consent order was made against her in favour of NMC Capital.
Still, Argentina did not pay the judgment debt.So, when Argentina’s military ship called ‘ARA Libertad’ entered
Tema Harbour in October, 2012, NMC Capital caused it to be arrested by a order
from the High Court, Accra.
That was not the end.
When the Government of Argentina heard of the arrest of its military ship in
Ghana, Argentina instructed their lawyers to get the ship released. In the
meantime, the ship arrest set in motion a diplomatic uproar. The Accra High
Court Judge was adamant. He dismissed the application to release the ship.
Argentina was livid and dragged Ghana before the International Tribunal of the
Law of the Sea (ITLOS) and immediately applied for provisional orders. The
Tribunal gave its ruling on the provisional measures and ordered Ghana to
release the detained ship unconditionally and immediately, and to ensure that
it was resupplied to enable the ship to sail out of Ghana’s maritime waters.
hurried to the Supreme Court for an order to quash the High Court Judge’s
ruling. The Supreme Court did not waste any time in quashing it. In the
meantime, the ship had already sailed away from Tema by the time the Supreme
Court ordered its release.
It is interesting to
observe that, Argentina’s woes in the case started
from its decision not to pay its bondholders, including NMC Capital. It is
worth noting how the English Courts ignored Argentina’s plea of state immunity
and went ahead to hear the case and entered judgment against Argentina. If
Argentina, a much bigger player in international affairs, will be rebuffed in
her claim to state immunity in foreign courts, one can only imagine the length
Ghana’s foreign bondholders will go to rubbish Ghana’s claim to sovereign
immunity and claim their moneys. At any rate, the global humiliation Argentina
suffered when the arrest of the ARA Libertad ship hit international headlines
was huge. Ghana must brace itself up for worse.
Now, when it comes to local investors (individuals and
companies), under the debt exchange programme, a bondholder judgment creditor
may a) only seize government’s commercial assets, not ministries and other
government properties and b) money in the Government’s Petroleum Fund cannot be
attached to satisfy any bondholder’s judgment debt.
It is submitted that,
the Ministry of Finance’s statement that those investors who decide not to sign
on to the debt exchange programme may not be able to execute any judgment
against the Government in respect of ministerial/governmental assets and the
Petroleum Fund is deceptive at best, and a plain lie at worst. Those provisions
in the debt exchange document show a craving for colonial era-inspired laws
that put the State on a legal pedestal, thereby making suing and executing
judgments against the State almost an impossible task. Ghanaian law has long
moved away from that era.
A little historical background to how parties execute judgments
against State property will help here. Before the birth of the 1992
Constitution, there were certain institutions and entities that were immune
from the courts’ execution processes. Thus, the normal execution processes of
the courts that litigants used in enforcing judgment debts were not available
to be used for enforcing judgments against such institutions.
Those institutions and
entities had a number of laws regulating how a party who obtained judgment
against them must enforce those judgments against their properties. They were
simply ‘untouchable’ for purposes of executing court judgments. Examples of
those laws and institutions were the State Proceedings Act, (on State
property) the Chieftaincy Act (on stool property) and the Statutory Corporations Act (on State corporations’ properties).
With the coming into force of the Constitution, a new wind started blowing. The Constitution provides that
all persons are equal before the law. Therefore, the Constitution has, for
example, abolished the requirement for a person to obtain the
Attorney-General’s fiat before suing the Government.
The Constitution provides that where a person has a claim against the
Government, that claim can be enforced as of right by suing the Government for
that purpose without the grant of the Attorney-General’s fiat. Consequently, in 1998, Parliament passed the State
Proceedings Act to bring the law in line with the constitutional
Section 8 of the law (Act 555) provides that the Government can
sue or be sued in civil proceedings in court under the same Rules of Court that
apply to cases between private individuals and companies. The Government is
also liable under contract law and can be sued for breach of contract in the
same way as a private person of full age and capacity. That means the Government can be sued in
court just like any other person. The only exceptional requirement is that, the
Attorney-General must be given 30 days’ notice of the intended action before
the writ is filed. But even if the person
who sues the Government forgets to give the 30 days’ notice, the case will
not be invalid. The law gives a court the power to adjourn the case for the
person to serve the notice on the Attorney- General.
Most significant for our present discussion, the law also states
that, a judgment given against the Government can be enforced or executed in
the same way as a judgment given against any person. In the Supreme Court gave
judicial blessing to Article 293 (1) of the Constitution and held that, (My emphasis). With this clear and bold declaration by the
apex Court, one wonders how the provision in the Petroleum Revenue Management
Act that shields the Petroleum Fund from attachment in
execution of a judgment debt against the Government can stand up to
constitutional and judicial scrutiny.
In the premises, if
the Government entered into contracts with investors by way of bonds, and the
Government fails to pay the bonds and the agreed interest as and when they fall
due, investors have the legal right to sue the Government. In fact, Government
has lost many cases in court and has been ordered by the courts to pay damages
for breach of contract. Consequently,
if bondholders (individuals or companies) decide not to take part in the debt
exchange programme and the Government refuses to pay their bonds, they can sue
the Government to recover their money and go into execution by seizing and
selling Government property, among other available execution processes under
the Rules of Court.
As at now, the
deadline for the debt exchange programme has been extended three times already.
Considering what’s on the horizon, a further extension may be in the works.
And talking about extensions, in a recent copy of the Supreme
Court’s Cause List,the case was
listed for hearing. The proceedings was in respect of Dr. Opuni’s recent application
challenging the continuous handling of his case by Mr. Justice Honyenuga, a
retired Justice of the Supreme Court, sitting as an additional High Court
Judge. As will be recalled, the Chief Justice gave Mr. Justice Honyenuga a 6-
month extension after the latter clocked 70 years, the compulsory age of
retirement of a Justice of the Supreme Court. This extension was made in
September, 2022. By the pending application at the Supreme Court and further
possible interlocutory interregnum, one wonders what will happen if the 6-month
extension period expires and the case is not concluded.
I have had occasion to
share some thoughts on this subject. That
discussion was on the ‘additional judge’ concept generally. There, I made
reference to the case. In
that case, the late Mr. Justice Afreh sat as an additional High Court Judge
after he had attained the age of 70 years and he had been given a 6-month
contract extension to finish hearing the High Court case. The applicant
seriously challenged Mr. Justice Afreh’s jurisdiction after the latter reached
the statutory retiring age of 70 years. The applicant lost the case. There were
avoidable bruises elsewhere.
In the light of the
challenges retired Justices who gain extension of tenure to sit on pending
trial cases face, it is most intriguing to gather that, such extension after
retirement is becoming fashionable. It has even been suggested that, though
most Justices are happy to take a bow and go home and rest, others literally
beg to enjoy 6 more months of the bows (pun intended) before retiring.
As may very well be
argued that, the Constitution sanctions the 6-month extension by a Chief
Justice for retiring Supreme Court Justices – a position that is currently
under litigation before the Supreme Court. But it submitted that, such
extensions must not be made as a matter of course. It must be made sparingly
and in obvious cases where it is absolutely necessary. Considering that there
is no shortage of Supreme Court Justices (as there is no upper limit to their
number), proper assignment of cases will ensure that Justices who are on the
verge of retirement are given, for instance, single Justice case assignments to
hear motions and other interlocutory applications. So that, by their birthdate
of retirement, they are free to go.
The Supreme Court
under the 1992 Constitution has had its fair share of forks in the road. In
recent times, allegations have been rife in judico-legal circles about some
soon-to-retire Justices who have lined up to plead for 6-months extension of
their tenure of office. The mill has it that, unlike Messrs. Justice Afreh and
Justice Honyenuga who got extensions to continue handling cases as “additional
High Court judges,” some of the alleged neo-applicants have no such
“additional” trial court duties. But they still don’t want to go home and rest,
as the majority of their predecessors have done. Will they sit as ‘additional
Supreme Court Justices’ and ‘conclude’ their part-heard Supreme Court cases?
Will they now be given fresh ‘additional High Court Judge’ duties in
retirement? Hopefully, the prospect will remain a fanciful story in the mill.
The Government has driven the nation into debthood. The
Government has a bounden duty to take the nation out of it. There are a
plethora of actions the Government can take to ensure its debt burden is
‘sustainable,’ in economic jargon. The Government went to the IMF. The
Government must find ‘sustainable’ ways to meet IMF’s notorious killer
conditionalities. What the Government must not do, is to present a
‘voluntary-by-force’ debt exchange programme to bondholders and brow beat them
to accept it or kiss their moneys goodbye. Countries such as Argentina that adopted
such “ye ntua” tactics
to dodge paying their bondholders are still facing relentless judgment
creditors around the world.
No bondholder must be pressured or stampeded into signing on to the debt
exchange programme for fear of not being able sue and execute a judgment
against the Government if the Government fails to pay back the bondholder’s
money when the bonds mature and fall due. The Government can be sued on the
bonds and successful bondholders will be able to execute their judgments
against the Government in the same way as a private person.
Under section 4
of the Limitation Act, 1972 (NRCD 54), the time limited for suing another
person for breach of contract is 6 years. It is most intriguing, therefore,
that Government of Ghana could put together a debt exchange arrangement that
will effectively tie bondholders’ hands for 12 years, whiles putting yearly
droplets of 8% or 9% of their investments on their tongues to keep them alive
One Yaw Brogya
Genfi complained to CHRAJ to investigate the Minister of Finance, Mr. Ken Ofori-Atta
in an alleged conflict of interest situation in the issuance of 7-year and
15-year bonds by the Government for a total amount of US$2.25 billion at 19.75%
interest rate in 2017. The complainant questioned why 95% of the bonds were
purchased by one single investor, Franklin Templeton Investment whose director,
one Trevor G. Trefgarne, is also described as chairman of Enterprise Group
Limited, a company partially owned by Data Bank Limited, a company 1st
defendant is known to have significant interest. The complainant, thus, raised
issues of conflict of interest against Mr. Ofori-Atta. CHRAJ concluded that,
the allegations by Brogya Genfi that Mr. Ofori – Atta has contravened Article
284 of the 1992 Constitution by putting himself in a conflict of interest
situation in relation to the issuance of the bonds had not been substantiated.
J1/05/2018 judgment dated 13
The assets the
Government intends to exempt from execution under sovereign immunity principles
are ”(a) property or assets used by a diplomatic or consular mission, (b)
property or assets of a military character and under the control of a military
authority or defence agency or (c) property, assets or infrastructure located
in the Republic and dedicated to a public or governmental use (as distinct from
property dedicated to a commercial use) or (d) assets protected under the
Petroleum Revenue Management Act, 2011 (Act 815):” See page 18 of the “Amended
and Restated Exchange Memorandum.” Section 41 (3) of Act 815 states that a
court shall not make an order for the attachment of moneys in the Petroleum
Funds. Section 17 (3) (c) of the State Proceedings Act, 1998 (Act 555) states
that a Court shall not make an order to attach money which, by an
enactment, (such as Act 815) is prohibited or restricted from attachment or the
execution of a debt
1961, Act 151,
Section 15 (4) provided thus: “save as aforesaid no execution or attachment or
process in the nature thereof shall be issued out of any court for enforcing
payment by the Republic of any such money or costs as aforesaid and no person
shall be individually liable under any order for the payment by the Republic or
any department or servant of the Republic of any such money or costs.”
See Articles 17
(1): “All persons shall be equal before the law” and 293 (1): ” Where a person
has a claim against the Government, that claim may be enforced as of right by
proceedings taken against the Government for that purpose without the grant of
a fiat or the use of the process known as petition of right.”