Debt programme a bitter pill but the alternative is dire – Joe Jackson

The Director of Strategy and Business Operations at Dalex Finance, Joe Jackson has charged institutions and individuals to embrace government’s proposed measures regarding its debt exchange programme.

Some industry players have chided government on aspects of the policy.

Speaking on Eyewitness News on the merits and otherwise of the scheme, Joe Jackson said, although it presents a difficult situation, the public should remain calm.

“The alternative is dire. So we have to take a rationale and measured approach to this bitter pill that we are about to swallow. That is the truth of the matter. We cannot be screaming and shouting; panicking won’t solve the problem. It is a bitter pill and difficult situation, and it will make it harder for the government to pick up money for its bonds in the months and years ahead.”

Ghana’s Domestic Debt Exchange Programme has been launched to put the country’s debt on a sustainable path.

The debt restructuring will see a slash in interest payments for domestic bondholders to zero percent in 2023 and five percent in 2024.

Existing domestic bonds as of December 1, 2022, will also be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037 – all in a bid of restoring the nation’s capacity to service its debt.

Under the programme, however, treasury bills and individual bondholders will not be affected while there will be no ‘haircuts’ on the principal of bonds, government said.

The debt exchange programme, seeks to classify domestic bonds into four categories to create fiscal space as part of preparations to qualify Ghana for an IMF facility.

Many labour groups and the Minority in Parliament have raised concerns about government’s failure to engage before launching the programme.

The labour unions say, the arrangement will gravely affect them given its potential negative impact on workers’ pensions.

For the Minority Caucus, it rejects the programme, citing financial dishonesty on the part of President Akufo-Addo and his Finance Minister, adding that the programme would visit more frustration on investors and deprive them of their returns on investment.