Debt exchange: New deadline cannot be met with current entrenched positions - Economist

An economist, Dr. Theo Acheampong, has stated that due to the current state of affairs surrounding the debt exchange programme it is likely that the new deadline of January 31, 2023, will not be met.

On January 16, 2023, the finance minister announced that the invitation for the debt exchange programme has been extended to January 31.

This will be the third time the government has had to extend the deadline due to its inability to achieve its target of about 80%.

Dr. Acheampong, like other analysts and experts, is of the belief that the government has to have broader stakeholder consultations for consensus building since bondholders are being reluctant to roll unto the programme.

“Currently in my view, the process has been bungled because of the sort of I-know-it-all attitude of the government where instead of engaging and consulting widely with the people that are affected, a lot of the things were pretty much thrown at them.

“And this is people’s monies, people’s livelihoods that we’re talking about. And so, there was always going to be heavy resistance to it. But what people wanted to see was the government to actually engage in an open and frank manner rather than attempting to force the whole thing on them as a take-it-or-leave-it option. And that is really where we have a lot of the challenges now,” he is quoted by myjoyonline.com.

He further noted that it was also impossible for the government to bring Ghana’s current debt to GDP levels to the earlier 55% announced by the government.

“I don’t think that the 31st January extension new date will be met because there are very entrenched positions here. And fundamentally, what this also means in my view is that that 55% debt to GDP number is not sustainable even by 2028. So we might have to actually go back and rework those numbers because you’re talking about having to reduce your debt threshold by half within the space of about 4 years and that is going to impose heavy austerity on the people of Ghana.

“So perhaps it’s really a question of going back to the drawing board and trying to see if we can instead have a gradual reduction of these debt metrics and indicators over maybe an eight to 10 years’ period,” he said.

SSD/DA