Bond Exchange: Calming the market, constructive engagement and seeking alternatives

The objective of my engagement with the media yesterday was to avert a needless run on our banks and mutual funds when I received several calls from very important senior citizens, high net worth individuals and ordinary bond holders and mutual fund investors who had panicked from seeing the unrealised investment losses after they received their statements from their financial institutions.

Knowing that this voluntary announcement Hon Ken Ofori-Atta has no legal effect, I decided to intervene to calm the market and ensure stability for constructive engagements of Government with stakeholders to navigate this precarious activity.

I call on Government to signal a genuine commitment to take the lead in ensuring that monies to be realised from this exercise will not go into funding inefficiencies in Government spending.

In particular, spending on large size Government such as having needless ministries that could be collapsed together, fulfilling the promise in the 2022 budget to scrap development authorities in 2023, ceasing funding of GAT and scrapping of expenditures on the national cathedral will help to manage the process.

Government must show a willingness to scale back some of the freebies that are hurting Government finances and return them when the situation improves and need be.

As laudable as they may be the nurses and teacher trainee allowances could be looked at and alternative support provided to students to free up the budget.

I believe that we must take advantage of the opportunity our crisis brings to have a conversation about the free SHS and agree on a targeting framework to support the program and liberate the budget going forward.

The capital market has already been experiencing deteriorating asset values since 2021 through unreasonable yields priced into the economic uncertainties and should be prepared for realignment of asset values to aid Government's efforts at debt sustainability and aggressive positive primary balance development.

Government may explore the possibility of a sunset fiscal policy on interest income and capital gains that could yield about GH¢10 billion to GH¢15 billion a year whilst yielding interest income to bondholders to improve cash flow and value generation to assist the market rebound and support an enabling capital market for capital formation and financing sustainable national development.

I am very much prepared to support Government to support our country to deal with this huge national assignment to safeguard assets, build a resilient economy and guarantee livelihoods.

I have had some engagements seeking to clarify whether or not Government can disagree with the A-G's opinion and proceed to own and deliver a program such as the imposition of a debt exchange programme.

I do not pretend to have answers or a superior position on such a legal conversation except to say that Government must reconsider its position, hold the breaks and deal with the substance and obvious fallout from its announcement.

This is a very important national assignment that needs the buy-in of stakeholders and we must strive to achieve that and carry everyone along.

Debt restructuring is a must but in a legal consultative process.

Ghana wins and we move.