Debt Exchange: We are creating incentives for political elite to govern, borrow and use anyhow – Bokpin

Professor of Finance and Economics at the University of Ghana Business, Professor Godfred Bokpin, is warning of recurrence of debt restructuring if individual bondholders and pensioners are force to sign onto the Domestic Debt Exchange Programme.

According to him, the nation is creating a governance system whereby governments will mismanage the economy and then later resort to debt restructuring.

“Look, if we do not correct that canker and we coerce our own people, pensioners and the rest of them, we will go through this and probably less than three years, there may be the need to restructure our debts again”, he told Joy Super Morning Show.

“Why are we saying so? If the problem is largely governance, then governance reforms must underpin the structure adjustment and the necessary anchoring structural adjustment.  So whatever gains we make under the IMF programme will be sustainable. We should not allow that to happen”, he explained

All things being equal, the Domestic Debt Exchange Programme will end today, February 7, 2023.

However, government has appealed to individual bondholders that are yet to sign onto the programme to do so.

“I do not think that individual bond holders should sign up for the bond. I do recognize that a certain level of debt restructuring is inevitable. But we are not at the point where we could ask individual bonds holders to come to the table because the fiscal side that cause the problem has not done even the average. Once the fiscal side hasn’t done what is supposed to do, there is no imperative for us to shift the burden on the individual bondholders or even institutional bondholders.

Furthermore, Professor Bokpin said “we should not allow that to happen. You know what we are doing if we are not careful we are creating the incentive for a political elite through political capture, govern, borrow and use it anyhow.”

“And they know that they can apply the haircut on us. No!”, he concluded

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