The Chief Executive Officer of Dalex Finance and Leasing Company Limited, Kenneth Thompson, has urged government to secure cross-party support for the proposed Domestic Debt Exchange Programme.
He said having multi-party and stakeholder support is crucial, especially if/when the programme’s duration goes beyond the current administration’s tenure of office.
“With the DDEP covering a period beyond the term of the current government, it is important that the programme has cross-party support,” he told the B&FT.
The DDEP, which seeks to exchange maturing bonds for new ones with extended maturity periods among other measures, according to government is expected to address internal and external imbalances in the economy, and also enable the country to qualify for International Monetary Fund (IMF) support.
The programme has however been fought against by several organisations and groups – including opposition Members of Parliament and individual bondholders. The pushbacks have led to three different postponements to the deadline for voluntary participation by government of Ghana bondholders, the latest of which came on January 31, 2023. The new deadline is now February 7 this year.
“There is a lot of anger welling up inside people which should not be underestimated,” Mr. Thompson said, adding that a more important measure would be for government to demonstrate a desire to stabilise the economy by cutting down expenditure and size of government, and adopting more prudent revenue mobilisation strategies.
“Following the hue and cry over the DDEP, I thought government would announce some cuts to government expenditure. This may include the consolidation of some ministries and rationalisation of public sector departments. Unfortunately, this will be ‘too little too late’. To achieve support for the DDEP, government must be transparent and ‘share the pain’ with bondholders. Government expenditure must be cut significantly,” he noted.
Meanwhile, to mitigate the DDEP’s impact, he said: “Emergency support should be provided by the Bank of Ghana. This should include allowing financial institutions to convert illiquid assets such as shares and property into cash”.