Vera Fiador, Associate Professor at the Department of Finance in the University of Ghana Business School has cautioned the Ghanaian government to intensify engagements on the controversial Domestic Debt Exchange Programme (DDEP) with the various stakeholders in order to avoid dire consequences on the economy.
According to Prof. Fiador, it is imperative for government to be transparent with the individual bondholders on the programme since failing to do so will mean grave consequences for the Ghanaian economy.
Government must deepen negotiations with bondholders, Vera Fiador said in order to arrive at a decision that will be embraced by all.
“In terms of how they should go about it, it’s more to do with stakeholder engagement and buying. Clearly, it is not rocket science. We realized that we have borrowed more than we should have and that is what has brought us here.”
Prof. Fiador
Vera Fiador stated that in fixing the problem and making sure that no party looses, government needs to engage more with and also begin to meet the people the programme concerns at the point of their needs.
“So of course we will have to identify some of the very vulnerable areas that we need to look at and in that regard, we should be able to come up with what will appear to be a win-win – not so great of a win-win, given that we are in a very volatile set-up, but I think something can be worked out.”
Prof. Fiador
The Associate Finance Professor has advised the government to identify avenues where it could fairly negotiate with the various stakeholders who will be affected by the programme since according to her, Ghana cannot trash out its request to IMF for a loan to restore the economy because of its limited choices.
This negotiation requires that government deepens its engagement with affected parties, Madam Vera emphasized.
“Identify areas that government could, should I say because they aren’t plenty, their choices are quite limited so I forsee a case that in the need to meet the International Monetary Fund (IMF) conditionalities, I think they have no choice but to go out there.
“But the question then is the implementation requires that more of engagement with the affected parties so that they can get a bit of buy-in. A buy-in would actually should I say stabilize the situation fast.”
Vera Fiador
Meanwhile, the Ghana Individual Bondholders Forum has stated that bondholders will potentially lose a significant percentage of their investments if they are included in the government’s Domestic Debt Exchange Program (DDEP).
Bondholders Express Disappointment In Government
The Ghana Individual Bondholders Forum has expressed disappointment in the government’s handling of the Domestic Debt Exchange program, stating that President Akufo-Addo’s promise to bondholders of no loss or haircut has not been honored.
The forum mentioned that the President had previously said that there would be no haircuts in his public address on December 5, 2022, but now, bondholders face significant losses.
The bondholders estimated a loss of 50% of their investments when discounted at the coupon rates of the original bonds, 71% when discounted at current T-bill rates, and 88.2% when factoring in prevailing inflation.
The President’s earlier statement that nothing would be lost, missing, or broken has not been upheld and that the livelihoods of bondholders will be destroyed, the forum added.
The Forum stated that the total value of bonds held by individuals directly and through collective investment schemes is approximately ¢15.5 billion, which makes up 11% of the total eligible bonds and capitalized interest.
“With your set target of 80% of eligible bonds, Individual Bondholders are not a critical success factor to the viability of the DDE programme as you envisage, yet the impact of their inclusion has incalculable consequences. Please exclude us and save 1.3 million livelihoods and dependents from shackled penury.”
Bondholders at the Forum
The Forum criticized President Akufo-Addo’s policies, saying that they have led to citizens becoming impoverished despite their dedication to working hard and paying taxes.
“Your DDE as proposed for Individual Bondholders takes away our liberty to self-sustain, mocks hard work, and robs us of legally acquired property. None of these reflect the tenets of good governance.”
Ghana Individual Bondholders
The Bondholders also stated that it has members with technical and policy expertise who are willing to help the government explore viable options that do not significantly harm the interests of individual bondholders.
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