Debt Exchange Program: January 31 Extension Will Still Not Be Met – Economist
After the third consecutive extension of the deadline for government’s Domestic Debt Exchange Program, Political Risk Analyst and Economist, Dr. Theo Acheampong believes the new deadline is still not feasible.
The second extension which expired on Monday, January 16, 2023 was further extended to January 31 2023 through a statement by the Ministry of Finance.
According to analysts, the consistent extension can attributed to the stalemate between government and some affected bondholders who are opposing the program due to lack of stakeholder engagement and the perceived hardships the program will bring to the affected bondholders.
Individual bondholders and individual pensioners affected by the program have vehemently opposed the program asking to be exempted due to a number of reasons.
Commenting on the new deadline, Dr. Theo Acheampong opined that the current controversy is as a result of what he describes as the “I know It All” attitude of government who are unilaterally taking decision without proper consultation of the very people who will be affected by those decisions.
According to the economist, issues involving monies and people’s livelihoods should be treated with kid gloves and not the way and manner spearheaded by government in this situation. He added that the resistance staged by some of the affected groups is an indicated that government failed to engage in an “open and frank” consultations before announcing the program.
He therefore noted that the new deadline will still not be met because of the entrenched positions taken by the parties involved. With these challenges the program is grappling with, Dr. Theo Acheampong opined that the 55% Debt-To-GDP ratio by 2028 is not sustainable.
“Currently in my view, the process has been bungled because of the sort of i-know-it-all attitude of the government where instead of engaging and consulting widely with the people that are affected, a lot of the things were pretty much thrown at them. And this is people’s monies, people’s livelihoods that we’re talking about. And so there was always going to be heavy resistance to it. But what people wanted to see was the government to actually engage in an open and frank manner rather than attempting to force the whole thing on them as a take-it-or-leave-it option. And that is really where we have a lot of the challenges now,” he said.
He stressed that “I don’t think that that 31st January extension new date will be met because there are very entrenched positions here. And fundamentally, what this also means in my view is that that 55% debt to GDP number is not sustainable even by 2028. So we might have to actually go back and rework those numbers, because you’re talking about having to reduce your debt threshold by half within the space of about 4 years and that is going to impose heavy austerity on the people of Ghana.”
“So perhaps it’s really a question of going back to the drawing board and trying to see if we can instead have a gradual reduction of these debt metrics and indicators over maybe an eight to 10 years period,” he said.