Reduction in coupon payments the exact effect of 'haircut' – Togbe Afede XIV

The Agbogbomefia Paramount Chief of Asogli State, Togbe Afede XIV, has stated that the government’s claim of “no haircuts” is not accurate.

He described it as a mockery to the Ghanaian people while adding that the announcement of a reduction in coupon payments by the government means a “haircut”.

In a 14-page opinion piece, Togbe Afede XIV said: “We are now faced with questions about debt sustainability and our ability to find the fiscal space to fund urgent and critical development needs.

“Now, the fears about Ghana defaulting on its debt repayment have effectively materialized with the announcement of a domestic Debt Exchange Programme. And we are making a mockery of ourselves talking ‘no haircuts’ when that is exactly the effect of reduction in promised coupon payments,” he said.

“These high-interest rates made it difficult for businesses to borrow to invest in the real sectors of the economy to achieve the value-addition we crave. It also perpetuated our import dependence, while making it difficult for local entrepreneurs to borrow, invest and increase local ownership of the economy,” he noted.

He further accused the BoG officials of inadvertently frustrating efforts aimed at restructuring the Ghanaian economy.

“Bank of Ghana officials have inadvertently frustrated the restructuring of the economy, which they themselves have identified as the solution to our balance of payments deficit and currency depreciation problems.”

“It is difficult to see how policy rate increases can fight cost-pushed inflation resulting from food or crude oil price increases or increased taxes on petroleum products. Sadly, even at the height of the COVID-19 pandemic, when income levels had fallen worldwide, and stimulus packages were being implemented everywhere to boost economic activity, BoG still ensured that we suffer under strangulating high-interest rates,” the economist added.

SSD/FNOQ