Labour unions request time to mull $2.7bn pension fund restructuring offer

Ghanaian labour unions have asked the government for time to assess a proposal presented on Thursday to restructure pension funds worth around ¢30 billion ($2.7 billion).

The West African nation is looking to extend the maturity periods of cedi currency bonds that the pension funds hold in exchange for higher interest payments as part of efforts to save billions in near-term debt payments under a loan deal from the International Monetary Fund.

Abraham Koomson, leader of the federation of labour, said after the meeting with the Finance Ministry that there was certain amount of “mistrust of government promises.”

“We need some time as workers’ representatives to engage our constituents on the new proposals,” he told Reuters, adding that a firm decision could be expected by the end of June.

The majority of eligible holders of Ghana’s local bonds participated in a domestic debt exchange in February. The pension funds were exempted after unions threatened to strike, but have now been offered their own deal.

In the proposal to the unions, the government aims to replace old bonds, which have shorter maturity periods with coupons averaging 18.5%, with new ones that have longer maturity dates and yields averaging 21%.

Thomas Kwesi Esso, Executive Secretary of the lobby group for the pension funds, told Reuters that the offer was an improvement and addresses liquidity concerns with the old bonds.

“We have seen the offer and we think it is better … but we are waiting for organised labour (unions) to have their discussions with government before we can all take a decision.”

Dr. Anthony Yaw Baah, Secretary General of the Trades Union congress, said the unions will analyse the offer and the exchange memorandum document before taking any decision.

The cocoa-, oil- and gold-producing nation has to shave off $10.5 billion in interest payments on its external debt in three years to be able to successfully implement its $3 billion loan deal from the International Monetary Fund meant to address its worst economic crisis in a generation.

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