Mahama Ayariga, the National Democratic Congress Member of Parliament (MP) for Bawku Central has contended that government’s Domestic Debt Exchange Programme (DDEP) has the tendency to debilitate domestic private banks.
Ayariga on January 30th, 2023, addressed a letter to the Governor of the Bank of Ghana, Dr. Ernest Addison, urging him to stop the illegal expropriation of the property rights of owners of domestic private banks.
“I contend that the Domestic Debt Exchange Programme will emasculate domestic private banks, as they will face capitalization and liquidity problems given that they will not receive timely and appropriate coupon payments from their bond holder (Government of Ghana).”
Mahama Ayariga
Also in the letter, the MP, who also doubles as an acclaimed lawyer, deemed inappropriate the directive of the Finance Minister, Honourable Kenneth Ofori-Atta, who asked the private domestic banks he had collapsed to approach the Ghana Amalgamated Trust Plc (GAT) for support.
“…The directive of the Minister of Finance, to those banks he has so emasculated, to approach the Ghana Amalgamated Trust Plc (GAT) for support from the Ghana Financial Stability Fund (GFSF) opens them up to a takeover by investors in the GAT, if the Ghana Financial Stability Fund is not wholly publicly funded.
“I further contend that political patronage and nepotism will inform the ultimate purchase of the shares in the private banks once GAT begins to dispose off these shares to realize the investments made in those banks (if GAT is not publicly funded).”
Mahama Ayariga
In Ayariga’s concluding remarks, he noted that the policy and strategic options chosen by the Finance Minister will influence illegal and unconstitutional expropriation of the private property of the immediate owners of domestic private banks and possibly, private international banks operating in Ghana.
The Lawyer, therefore, made a call out for the mobilization of the available intellectual competencies and political forces to defend the bona fide property rights of owners of private banks in Ghana.
“Not to do so with a sense of urgency will constitute the greatest dereliction of duty of our political class and the collapse of present owners of these banks and the takeover of these banking interests, similar to what was orchestrated in the PDS saga…
“…The intended ‘Agyapa’ deal, will capriciously, unlawfully and criminally transfer enormous wealth and concentrate it in the hands of those who might enjoy the patronage of the Minister of Finance. This could disorient our democracy and potentially destabilize our politics. The history of the recent banking sector “cleanup” remains fresh in our memory.”
Mahama Ayariga
The Chief Executive (CEO) of the Ghana Bankers Association, the CEO of GAT, the Speaker of Parliament, the Attorney General and the Minister of Justice, the leadership of Parliament, the board chairmen of all banks in Ghana as well as the Country Director of the World Bank office also received copies of Ayariga’s letter, which he addressed to the BoG Governor.
Background informing Ayariga’s letter to the BoG Governor
Mr. Ayariga recalled the Finance Minister’s announcement of a debt restructuring programme involving a debt exchange by government domestic bond holders.
The country’s total external debt stood at about GH¢383 billion as at November 2022. Domestic debt constituted GH¢195 billion, with the total debt, therefore, amounting to GH¢578 billion in November 2022, Mahama Ayariga noted.
Banks in Ghana, Ayariga added hold about half of the entire domestic bonds of the Government of Ghana and individuals hold 11% of the Government bonds.
Recalling the words of the Finance Minister to domestic banks on its DDEP, Ayariga said the Minister compelled domestic banks to “voluntarily” participate in the programme with the bonds they held.
The new terms of the programme which include coupon reduction and deferred payments, Ayariga noted will definitely negatively affect the liquidity, solvency and capitalization of these banks.
This, lawyer Ayariga identified would create a problem for the financial sector as individual investors will be scared.
Additionally, Ayariga believes that with the programme following right behind the recent banking sector “cleanup” and the collapse of some banks, people will shy away from depositing their funds in bank accounts.
“Our entire financial sector is in danger of collapsing.”
Mahama Ayariga
Another key note from Ayariga was the Finance Minister’s announcement of the Ghana Financial Stability Fund and further directive to banks to approach Ghana Amalgamated Trust PLC for a rescue package.
This letter by Mahama Ayariga to the Governor and those copied is therefore an eye opener to the dangers associated with this remedial prescription of the Finance Minister.
READ ALSO: There’s No Ministry Overseeing Agenda 111 Project- Akandoh
