Debt exchange: Convince World Bank, others to buy ‘bad’ Ghana bonds – Terkper to government

Former Finance Minister, Seth Terkper, is urging the government to prevail on its development partners, including the World Bank, to set up a fund to settle holders of Ghana bonds, particularly individuals, who are really in financial need, rather than including all of them in the debt exchange programme.

According to him, the move, similar to the one adopted by the USA and other countries during the global financial crisis, is the way to go until the financial market improves.

Speaking on the Joy FM Super Morning Show, Mr. Terkper, said this initiative will reduce the burden on the investors while saving the economy and its participants from stress.

“The solution may be fiscal or monetary. There are financial institutions, especially those we called primary dealers, those who buy the most government bonds – the ones who can even come in and stand in for government when the auction is failing. They may be more liquid and so we may want to prevail on them to set up funds”.

“If somebody wants to offload out of hardship, we can determine the criteria for those who have to pay children school fees and whatever we invested in the bonds for various reasons. They [bondholders] can go to these institutions, offload their bonds for a discount and when the conditions improve they can sell at a higher rate”, he explained.

Mr. Terkper further pointed out that “this is what happened during the global financial crisis where governments stepped in.  We can prevail on the development partners – the World Bank and others who have had experience in this to set up a fund to pay those who are really in need or set up a ‘bad bank’ and when the time are good you can buy back the bonds”.

According to him, the USA made a profit of US$3 trillion when it sold the ‘bad’ bonds when the market conditions improved later on.

“Look, the US Treasury – Federal Reserve when it bought the bad debt from the banks, it offloaded those bonds when the condition improved and made 3 trillion US$ profit which was given to the treasurer and the US put the funds aside.