- December 7, 2022
- Posted by: Amos Ekow Coffie
- Categories: Banking and Finance, Economics
According to Financial Analyst Mr. Joe Jackson, Ghanaians must acknowledge the reality of the Debt Exchange scheme that was introduced by Finance Minister Ken Ofori-Atta and move on, no matter how unpleasant or painful it may be.
Mr. Jackson also urged the government to reduce expenditure after implementing the program in order to contribute to helping the economy.
On Tuesday, December 6, Mr. Joe Jackson shared his thoughts on the situation on Ghana Tonight on TV3. He said, “At this time, people who were fortunate enough to acquire bonds in their own names are not being touched, and Treasury Bills are not being touched. Corporates are the ones who are impacted.
He continued, “Unfortunately, the smaller investor who isn’t wealthy enough to purchase bonds in his name is now indirectly harmed because he or she joined a corporate investment scheme, and the scheme, being a corporate entity, has been impacted by the haircut.
No matter how unpleasant the pill is, how unfair it is, or how irate we are about the pill, you have to accept it now and move on.
“The government must also reduce spending, this also involves lowering spending,” he said. I don’t believe the government has reduced spending sufficiently as of yet. We continue to borrow GHS 61 billion for the coming fiscal year.
“To me, that is illogical; that is not a country experiencing austerity. The government must reduce spending and demonstrate that they are prepared to suffer through it.
The program’s goal, according to the finance minister, is to reduce debt burden in the most open, effective, and quick way possible.
According to him, the Ghanaian government has been working hard to reduce the effects of the local debt exchange on investors who own government bonds by way of an Exchange offer.
As we promised, it specifically does not embed any principal haircut on Eligible Bonds. I’ll say it again as clearly as I can: Individual domestic bond holders are unaffected by this debt exchange and will not lose the face value of their investments. Therefore, let’s dispel any uncertainty and disprove any rumors that the government is planning to reduce your retirement savings or the nominal worth of your investments.
The opposite is true. Treasury Bills are entirely exempt from taxes, as was previously promised, and all holders will receive the full value of their investments upon maturity. The bond principal won’t be reduced in any way. Bond holders won’t be impacted at all, according to Mr. Ofori-Atta.
Domestic bond holders would be requested to replace their current instruments for new ones as part of the program, according to Mr. Ofori-Atta.
He said, “As of the first of December, existing domestic bonds will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”
All of these bonds will have yearly coupons that are 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.
He emphasized, “Coupon payments would be semi-annual.
Source: www.pfmtaxafrica.com/Amos Ekow Coffie