Economist, Dr Patrick Asuming, has called on government to cut back on its expenditure as part of efforts to ensure growth and stability in the economy.
According to him, government’s reopening of the Domestic Debt Exchange Programme (DDEP) is merely a palliative solution to an ongoing challenge.
He revealed that the reopening of DDEP by government is not a “very good move” as it will not yield targeted results.
Dr Asuming insisted that there are different things government can do to bring down the debt, considering the fact that the domestic debt exchange hasn’t done much.
“We have to grow the economy and we have to cut the size of the deficit. So, if we had cut the deficit substantially for this current year and going forward, maybe it wouldn’t have been so necessary to come back to do domestic debt exchange.
“Or if the economy was growing as much as it could have, this wouldn’t have been necessary. So, I think that it’s a reflection that other things haven’t gone as well as they should have gone and for me, I would have preferred that we probably focus a little bit more on expenditure cuts.”Dr Patrick Asuming
Dr Asuming reckoned that more DDEP as it’s being undertaken by government will actually hurt the financial system and delay growth of the economy.
Elaborating on the success of the DDEP, he highlighted that it is only a signal that government has had difficulties with restructuring other components of its debt.
“Earlier on, when it closed in February, we were told that this was very successful. So, to have the government come back after the finance minister in the spring meeting denied that there’ll be no second round, it just tells you that there are some difficulties meeting the volume of restructuring in some other places.”Dr Patrick Asuming
Reopening of DDEP sends wrong signal to investors
Justifying his stance, Dr Asuming emphasized that even though the statement issued by the finance ministry is trying to say the government is trying to help out those who couldn’t take up the offer the first time, there is a sense that government is “really struggling that’s why it’s being forced to bring this back”.
Commenting on what such a move will send to investors, Dr Asuming expressed his chagrin at the decision having any great impact on the country. Conversely, he maintained that it’s quite problematic when government only seems to be doing some “back and forth and flip flopping a little” on the matter.
“At some point, it clearly communicated that this is done and good, and we’re good to go, and suddenly it comes back and sometimes you get some rumor that this is coming back. I think all of these are not helpful in terms of policy communication.
“I think it just tells us that the government definitely wants to reduce the debt as much as it can, and it will not shy away from imposing more of the burden on Ghanaians.”Dr Patrick Asuming
Government, on September 14, 2023, reopened its Domestic Debt Exchange Program (DDEP) to enable individuals who could not sign up to the initial debt restructuring exercise but wish to participate do so now.
With this announcement from the Ministry of Finance, the window has been opened for interested investors seeking to hold onto government papers as government seeks to exchange these bonds at approximately GHS 12 billion in a bid to put the country on a path of sustainable debt levels.
In this latest move, government is inviting holders of its bonds including ESLA Plc and Daakye Trust Plc for participation.