It was reported in October 2023 that Ghana had submitted debt restructuring scenarios to its foreign bondholders which included a haircut of 30% to 40% on principal, a coupon of not more than 5%, and a final maturity of not more than 20 years.

At the beginning of the recently concluded DDEP, the President assured domestic bondholders that there was not going to be any haircut.

Some people have described the “no haircut” statement by the President as a lie and continue to describe it so, even after the conclusion of the DDEP. These people argue that there was a haircut in the DDEP, so the President had lied to domestic bondholders.

Among the people arguing that there was a haircut in the DDEP, those with inadequate finance background can be forgiven for making such an argument, but not those who are finance academicians and professionals who are required to give the right education to the public on the issue.

I recently asked my students the question below in a quiz.

What is known as a “haircut” in Sovereign Debt Defaults and Restructuring?

                      A. When the creditors are forced to take a reduction in their coupons.

                      B. When the creditors are forced to take a loss on their principals.

                      C. When the creditors are forced to accept extended maturity periods.

                      E. When the creditors are forced to exchange their bonds for new bonds.

If the finance academicians and professionals who have argued, and continue to argue that there was a haircut in the DDEP were to give the correct answer to the above question to receive an award, what will be their answer? I am sure they will be honest with themselves in their answer.

The President assured domestic bondholders that there was not going to be any haircut, and there was no haircut.