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The Government of Ghana has been told to further cut spending following the introduction of the Debt Exchange programme.
The government earlier suspended 20 per cent expenditure in the 2022 budget.
Going into 2023, Financial Analyst with the Dalex Finance Mr Joe Jackson says the government should do more that that.
He believes that the expenditure cuts previously done are not enough.
Sharing his views on the Debt Exchange programme on Ghana Tonight on TV3 Tuesday December 6, Mr Joe Jackson stated that “At this moment, individuals who were wealthy enough to buy bonds in their own names are not being touched, Treasury Bills are not being touched. It is corporates that are being touched.”
“Unfortunately,” he added, “the smaller investor who is not rich enough to buy bonds in his name is now indirectly, being affected because that investor joined a corporate investment scheme, and the scheme being a corporate entity has been affected by the haircut.
“At this moment, you have got to accept it and move on however bitter the pill is, however unfair the pill is, however angry we feel about the pill.”
He said “The government must also cut expenditure , this is about cutting expenditure too. At the moment, I don’t think the government has cut enough expenditure. Next year’s budget we are still borrowing GHS61billion.
“That doesn’t make sense to me, that is not a nation in austerity. The government must cut expenditure, they must show that they are willing to bear the pain.”
The Finance Minister explained the objective of the programme saying, it is to alleviate the debt burden in a most transparent, efficient, and expedited manner.
In this context, he said, by means of an Exchange offer, the Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds.
“In particular, it does not embed any principal haircut on Eligible Bonds, as we promised. Let me repeat this fact as plainly as I can, in this debt exchange individual holders of domestic bonds are not affected and will not lose the face value of their investments. So let us remove any doubt and discard any speculation that the Government is about to cut your retirement savings or the notional value of your investments.
“That is not the case. As already announced, Treasury Bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be NO haircut on the principal of bonds. Individuals who hold bonds will also not be affected at all,” Mr Ofori-Atta said.
Under the programme, Mr Ofori-Atta said, ” domestic bond holders will be asked to exchange their instruments for new ones.”
He added “Existing domestic bonds as of 1st December will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”
The annual coupons on all of these bonds will be set at 0 % in 2023, 5% in 2024 and 10% from 2025 until maturity.
“Coupon payments will be semi annual ‘ he stressed.
