Adnan Adams Mohammed
In a sixteen pointer release issued by the Communication Office of National Democratic Congress (NDC), it has outlined major factors that has destressed the Ghanaian economy in past years.
The factors, the NDC believe are the reasons why the government has to force down the throat of Ghanaians a Domestic Debt Exchange Program, which many affected parties feel it is too harsh.
Below are the pointers as outlined by the largest opposition party:
- The Bawumia-led Economic Management Team has terribly mismanaged the economy leading to its collapse and bringing severe hardships to Ghanaian. Ghana is now officially bankrupt and can no longer service its debt.
- An unsustainable public debt on which we have defaulted in repayment for the first time in 50 years, hyperinflation of 54.1%, a rapidly depreciating currency, economic hardships and an excruciating cost of living crisis are symptoms of this economic collapse.
- We are here because of the reckless over-expenditure of the Bawumia-led Economic Management Team which was climaxed in 2020 when Ghana recorded a budget deficit of 15.7% due to the reckless election-related expenses of the government. The consequence of this is the unsustainable public debt, which is 104% of GDP as of December,2022.
- After arrogantly denying that they needed to go to the IMF, they finally made a U-turn in July,2022 and requested for an IMF program.
- Due to our unsustainable debt, the IMF has demanded a reduction from the current debt to GDP ratio of 104% to 55% by 2028 as a prerequisite to access a program. It is in a bid to achieve this, that the Akufo-Addo/Bawumia government has unilaterally launched this draconian Domestic Debt Exchange (DDE) program.
- Under the DDE program, the principal of domestic bonds that will be maturing this year, 2023 will be paid over a 10-year period, that’s until 2033 while the principal of domestic bonds maturing after 2023 will be paid over a 15-year period, that is until 2038. And the coupon rates thereon reduced to 0% for 2023, 5% for 2024 and 10% for 2025 and beyond.
- The draconian DDE program is poorly through through and will impoverish banks, insurance companies, firms, pension funds and individual bond holders by denying them interest and principal payments due them if allowed to stand.
- This draconian DDE program being unilaterally imposed on bond holders, particularly individual bond holders by the Akufo-Addo/Bawumia government amounts to expropriation of the wealth of persons who have lent to government in violation of Article 20 of the 1992 Constitution. And must be rejected and resisted by bond holders and all fair-minded Ghanaians.
- In the case of banks who hold about GHS60 billion in government bonds, denying them interest payments in 2023 will impose severe hardships on them. In the case of some state-owned banks, up to 70% of their annual revenues come from interests on government bonds and the implication of the Domestic Debt Exchange (DDE) is that they will not have access to 70% of their revenue in 2023. This will severely cripple these banks and effectively lead to their collapse amidst major employee layoffs.
- For pension funds affected by the DDE, their ability to pay pensions to the aged and pensioners who depend on such payments for survival will be drastically hampered and this will lead to unspeakable hardships for pensioners.
- Including individual bond holders in the DDE contrary the President’s assertion that they will be exempted, will wipe out the middle class with up to 1.3 million bond holders affected and millions of their dependents thrown into a state of penury and hopelessness.
- Additionally, Bond holders who depend on their investments to buy medication, pay school fees or rent or fend for their families, pay their workers, invest in their business etc. will be denied access to their hard-earned monies which they have lent to government. This will worsen the financial position of bond holders and lead to inevitable lay offs by affected institutions. Access to credit will reduce significantly, economic growth slow down considerably and the excruciating hardships Ghanaians are already reeling under will soar.
- Even as the Bawumia-led Economic Management Team imposes such hardships on Ghanaians, government has insulated itself from sharing the burden. They have refused to cut down on non-essential expenditure, the needlessly huge size of government and such wasteful investments such as the building of a $450 million cathedral at a time when they cannot pay their debts and are giving crude haircuts to bond holders.
- It must be emphasized that we are in this mess because of the reckless borrowing and spending engaged in by the Bawumia-led EMT in the last six years which has ballooned the public debt from GHS120 billion in 2016 to over GHS500 billion. Against the wise counsel of many well-meaning Ghanaians, the wasteful and greedy Akufo-Addo/Bawumia government borrowed recklessly and celebrated same with Kenkey parties with the cousin of the President and finance minister profiting from same through transaction advisor fees.
- Government’s arrogant posturing and the lack of proper stakeholder consultations that has characterized the so-called debt exchange program must be strongly condemned. Government must stop treating Bond holders with contempt and engage them in proper negotiations for a workable settlement.
- In view of the disastrous consequences on all affected entities and individuals, the Minority caucus in Parliament demands an immediate suspension of the Domestic Debt Exchange pending much broader and deeper consultations with all stakeholders to achieve the most appropriate and least punitive approach to protect the interests of Ghanaians.
NCB-HQ
