The Banks have offered the government a 30 per cent relief in its bid to reduce domestic debt, which currently stands at nine trillion cedis, reports the Public Agenda.
The restructuring process, which also involves the non-bank financial institutions, covers three trillion cedis intended to transform the domestic debt into medium and long-term bonds. These would be in the form of one-to-three year bonds, said Jean Aka, Managing Director of Ecobank, who spoke on behalf of the banks at a press briefing on the final day of a National Economic Dialogue. He explained that the restructuring did not mean, the banks are writing off the debt the government owes.
Aka said proposals sent to the government needed to address earnings from the banks' secondary reserve holding which constitute a big portion of their liquidity flow, adding that a conversion criterion ought to be fashioned in order not to disturb their portfolios.
"Consequently, the Ghana Association of Bankers propose that only maturing bills must be converted and this should be spread in a manner that would allow banks to converted part of their maturing bills and not just all their maturing bills," he said.
"Our proposition is that banks should be left with a float of 70 per cent of maturing bills to ensure liquidity." He said the remaining 30 per cent could then be invested in 10 per cent sequences of one, two and three year bonds.
Such a mechanism, he said, would ensure that banks would be in a position to fulfill their obligation to customers who may want their deposits before the tenure of the bond.
