January 16, 2023

Minority Calls For Debt Exchange Programme Suspension

The Minority in Parliament has demanded for the suspension of the Domestic Debt Exchange (DDE) Programme.

According to the Minority, the programme is not in the best interest of financial institutions, insurance companies and Ghanaians at large.

Addressing the media, the Minority Leader in Parliament, Haruna Iddrisu, pointed to the lack of consultation by the government for the “confusion” in the implementation of the programme.

The government outlined the offer which included the pension funds on 5th December and was scheduled to end on December 19, however, the deadline was extended to December 30 with a contemplated settlement date of Friday, January 6, 2023.

The inclusion of pension funds was opposed by stakeholders forcing the government to amend and replace it with individual bonds and further extend the deadline to January 16, 2023.

On January 16, the government again extended the deadline to January 31 following opposition from individual bondholders pending consultation.

Suspension Of DDEP
The minority at a press conference on Monday called for the suspension of the programme to make way for “deeper” consultations.

“It is clear that the NPP Government did not properly think through this whole idea of debt exchange programme. This has led to the manifest confusion in the implementation of the ongoing debt exchange programme”.

According to the Minority, the programme will further exacerbate the already perilous financial sector.

He stated that “there should be deeper consultation and greater transparency about Ghana’s total debt and its management. The Nana Addo /Bawumia Government cannot continue to manage Ghana’s economy like a private entity.

“Ghanaians deserve to know how much is involved and how long the debt exchange will take. It is not just about people’s investment, but it is much more about people’s lives and livelihood. The Nana Addo /Bawumia Government should suspend the Debt Exchange Programme now.”

 

Implications of DDEP
The Minority anticipates the programme will negatively affect the banking sector, individual bondholders and pension funds.

 

“With over GHS 60 billion locked up in government bonds, the non-receipt of any interest this year and paltry sums in subsequent years, will prove the undoing of some banks. In the case of some state-owned banks, as much as 70% of their annual revenue comes from their investments in government bonds. Not paying them any interest in 2023 would effectively sound the death knell to these banks with its attendant consequences on depositors and employees who would have to be laid off.”

For pension funds, he said, there will be significant drop in value for Tier 2 and 3 pension payouts- which will drop further from their already low levels- whereas “Tier 1 (SSNIT) reserves will drop in value and SSNIT’s capacity to pay will suffer. Reserves of Insurance companies will fall with implications for benefit payments”.

Individual bondholders “would all but wipe out Ghana’s middle class and impose harsh suffering on them, their families, and dependents”.

Recommendations
The Minority wants the government to implement prudent management of the country’s finances and economy; cuts in non-essential expenditure and a reduction in the humongous size of government; exemption of individual pension contributors from programme; exclusion of individual bondholders; and consultation.

 

Source: opemsuo.com/hajara Fuseini

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