The Christian Council of Ghana (CCG) has asked the Akufo-Addo government to suspend its debt restructuring programme and engage in broader stakeholder consultations.
The council in a statement issued on Thursday, 19 January 2023, said the whole process ought to be halted after carefully examining the concerns of the general public.
“After various discussions with some stakeholders on Ghana’s economy, we’re convinced that the whole process needs to be suspended until broader consultations have been made,” the statement indicated.
The Council continued, “as an Advocacy group that speaks for the vulnerable in the society, the Council has examined the concerns of the Individual Bond Holders of Ghana (IBHAG), the Pensioner Bond Holders Forum, our church members and the general public and have identified lapses in the debt restructuring programme, a major one being lack of consultation with affected individuals and institutions.”
“With the current economic hardships in the country and the agitations among the general public, it is in the nation’s interest for the Finance Ministry to suspend the 31st January deadline given to individuals to sign on to the programme and rather propose a road map for dialogue to make the process participatory such that the outcome would be acceptable to all.”
The development comes on the back of agitations that have greeted the government’s Domestic Debt Exchange (DDE) Programme in the past months.
A group of Individual Bondholders fear that the debt exchange may bring untold economic hardship to the country and would potentially make their bonds worthless.
The Pensioner Bondholders Forum has also threatened to picket at the Ministry of Finance on January 23, 2023, if government fails to exempt them from the Domestic Debt Exchange Programme.
The Christian Council believes that it is only thorough engagements with stakeholders that “would help the government to appreciate the concerns of the Ghanaian people and put measures in place to address some of the challenges of the programme.”
But Finance Minister, Ken Ofori-Atta has said there will be no alternative of salvaging the crumbling economy if the government halts the Domestic Debt Exchange programme.
“We have a situation where our debt exchange is necessary… we have a situation where we have come out of certain formulations and we have gone ahead to discuss or the financial institutions that way to mitigate that. I think we’ve done that successfully,” he told Joy News yesterday.
“In the same way we sat with the Union pensions, and I think we are making great progress in what we do for them. In the same way in which we are looking at individual bondholders to see how we can tweak this. Would we lose a bit of what we have? I think all of us are going to. But we have to make sure that what we eventually come up with will create a sustainability,” he explained.
Meanwhile, the Minority in Parliament has called for the immediate suspension of government’s debt exchange programme, citing it will impoverish millions of Ghanaians and destabilise the financial sector.
Ranking Member on Parliament’s Finance Committee, Dr Cassiel Ato Forson, who made the call said the programme has to be halted while government engages stakeholders further.
He also cautioned that the Debt Exchange Programme will collapse the country’s banking sector if not halted and reviewed.
The former Deputy Minister for Finance predicted that some five (5) commercial banks risk collapsing should the Akufo-Addo goes ahead with the programme.
Speaking to journalists in Parliament, Dr Forson bemoaned the lack of liquidity support for the said banks, explaining that they have been locked up in government bonds.
“The banks will collapse. In fact I project a minimum of five banks if this (Debt Exchange Programme) goes ahead. Not only that; a number of banks will have to lay off some staff and close some of their branches,” the MP said.
He went on to explain that the banks thrive on depositors’ monies hence there will be liquidity issues and some banks will not be able to pay depositors.
“When you go to the banks and ask for your money, there is the possibility that you won’t get your money,” he added.
Debt Exchange Programme
Government last year announced Ghana’s Domestic Debt Exchange Programme to invite holders of bonds to voluntarily exchange approximately GH¢137 billion domestic notes and bonds of the Republic, including ESLA and Daakye for a package of new bonds.
As a result, existing domestic bonds were to be exchanged as of December 1, 2022, for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.
The annual coupon on all these new bonds will be set at zero per cent in 2023, five per cent in 2024 and 10 per cent from 2025 until maturity.
Coupon payments will be semi-annual.